Bacon Corporation began business by issuing 180,000 shares of $5 par value common stock for $25 per share.During its first year, the corporation sustained a net loss of $30,000.The year-end balance sheet would show

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The issue price of the 180,000 shares of common stock is $25 per share, therefore the total amount of paid-in capital is calculated as $25 x 180,000 = $4,500,000. However, the net loss incurred during the year is $30,000, which reduces the total paid-in capital to $4,470,000. The par value of the common stock is $5 per share, which means the total par value is $5 x 180,000 = $900,000. Therefore, the year-end balance sheet would show common stock of $900,000 and total paid-in capital of $930,000 ($900,000 + ($4,500,000 - $30,000)).

Bacon Corporation Began Business by Issuing 180,000 Shares of $5