A company issued 1,000 shares of $10 par value common stock in exchange for $15,000.Which of the following correctly describes the impact of this transaction on the financial statements?
A)A $15,000 gain is reported on the income statement.
B)Contributed capital in the amount of $10,000 is reported on the balance sheet.
C)Common stock is reported on the balance sheet at $15,000.
D)Additional paid-in capital of $5,000 is reported on the balance sheet.

Question

Quizplus · Accepted Answer

Additional paid-in capital ($5,000) represents the excess of the selling price ($15,000) above the stock's par value ($10,000).

A Company Issued 1,000 Shares of $10 Par Value Common