A corporation was organized in January 2008 with authorized capital of $10 par value common stock. On February 1, 2008, shares were issued at par for cash. On March 1, 2008, the corporation's attorney accepted 7,000 shares of common stock in settlement for legal services with a fair value of $90,000. Additional paid-in capital would increase on $\begin{array}{cc}
&\text {February} 1,2008&\text { March 1, 2008 }\\end{array}$
A)$\begin{array}{cc}&&\text { Yes }&&&&&& \text {No }\\end{array}$
B)$\begin{array}{cc}&& \text {Yes} &&&&&&\text {Yes} \\end{array}$
C)$\begin{array}{cc}&&\text { No} &&&&&&\text { No }\\end{array}$
D) $\begin{array}{cc}&& \text {No} &&&&&& \text {Yes} \
\end{array}$

Question

A corporation was organized in January 2008 with authorized capital of $10 par value common stock. On February 1, 2008, shares were issued at par for cash. On March 1, 2008, the corporation's attorney accepted 7,000 shares of common stock in settlement for legal services with a fair value of $90,000. Additional paid-in capital would increase on $\begin{array}{cc}
 &\text {February} 1,2008&\text { March 1, 2008 }\\end{array}$
A)$\begin{array}{cc}&&\text { Yes }&&&&&& \text {No }\\end{array}$
B)$\begin{array}{cc}&& \text {Yes} &&&&&&\text {Yes} \\end{array}$
C)$\begin{array}{cc}&&\text { No} &&&&&&\text { No }\\end{array}$
D) $\begin{array}{cc}&& \text {No} &&&&&& \text {Yes} \
\end{array}$

Quizplus · Accepted Answer

On February 1, 2008, shares were issued at par, so there's no additional paid-in capital because they were sold at their par value. On March 1, 2008, the shares were issued for services valued at $90,000, which is above the par value of the shares ($10 par value x 7,000 shares = $70,000), resulting in additional paid-in capital of $20,000 ($90,000 - $70,000).

A Corporation Was Organized in January 2008 with Authorized Capital February1,2008 March 1, 2008 \begin{array}{cc} &\text {February} 1,2008&\text { March 1, 2008 }\\\end{array}​February1,2008​ March 1, 2008 ​

A Corporation Was Organized in January 2008 with Authorized Capital $\begin{array}{cc} &\text {February} 1,2008&\text { March 1, 2008 }\\\end{array}$