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

Question

The corporate charter of Llama Co. authorized the issuance of 10 million, $1 par common shares. During 2018, its first year of operations, Llama had the following transactions:  What amount should Llama report as additional paid-in capital 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, there was no impact on PIC. On Dec 28, additional paid-in capital (PIC-share repurchase) was credited for $4 [2 million shares × $2/share ($20 - $18 cost)]

The Corporate Charter of Llama Co