The corporate charter of Alpaca Co. authorized the issuance of 10 million, $1 par common shares. During 2018, its first year of operations, Alpaca had the following transactions: What amount should Alpaca report as additional paid-in capital? excess of par, in its December 31, 2018, balance sheet?

Question

The corporate charter of Alpaca Co. authorized the issuance of 10 million, $1 par common shares. During 2018, its first year of operations, Alpaca had the following transactions:  What amount should Alpaca report as additional paid-in capital? excess of par, in its December 31, 2018, balance sheet?

Quizplus · Accepted Answer

On Jan. 1, additional paid-in capital (PIC--excess of par) was credited for $112 [8 million shares × $14/share ($15 - $1 par)].
On June 3, additional Paid-in capital-excess of par was debited for the original issue of $28 (2 million shares × $14/share), and retained earnings was debited for $6 (2 million shares × $18 ? $15).
On Dec 28, additional paid-in capital (PIC--excess of par) was credited for $38 [2 million shares × $19/share ($20 - $1 par)].

The Corporate Charter of Alpaca Co