Michael's Motor Scooters has 1,000 shares outstanding each with a par value of $0.05. If they are sold to shareholders at $5 each,what would the capital surplus be?
A) $4,400
B) $4,500
C) $4,750
D) $4,950
E) $5,000

Question

Quizplus · Accepted Answer

The capital surplus is calculated as the difference between the selling price and the par value, multiplied by the number of shares. Here, ($5 - $0.05) * 1,000 = $4,950.

Michael's Motor Scooters Has 1,000 Shares Outstanding Each with a Par