On January 12, Year 1, Gilliam Corporation issued 550 shares of $12 par-value common stock for $15 per share. The number of shares authorized is 5,000, and the number of shares outstanding prior to this transaction is 1,200. Which of the following answers describes the effect of the January 12, Year 1 transaction?

Question

Quizplus · Accepted Answer

Assets (cash) increase by $8,250 (550 × $15), common stock increases by $6,600 (= 550 shares × $12 par value), and paid-in excess of par value − common increases by $1,650 (= $8,250 − $6,600). The cash inflow is a financing activity.

On January 12, Year 1, Gilliam Corporation Issued 550 Shares