Bagwell's net income for the year ended December 31,Year 2 was $185,000.Information from Bagwell's comparative balance sheets is given below.Compute the cash received from the sale of its common stock during Year 2.
$$\begin{array} { | l | r | r | }
\hline \text { At December 31 } & \text { Year 2 } & \text { Year 1 } \
\hline \text { Common Stock, \$5 par value } & \$ 500,000 & \$ 450,000 \
\hline \text { Paid-in capital in excess of par } & 948,000 & 853,000 \
\hline \text { Retained earnings } & 688,000 & 582,000 \
\hline
\end{array}$$

Question

Bagwell's net income for the year ended December 31,Year 2 was $185,000.Information from Bagwell's comparative balance sheets is given below.Compute the cash received from the sale of its common stock during Year 2.
$$\begin{array} { | l | r | r | } 
\hline \text { At December 31 } & \text { Year 2 } & \text { Year 1 } \
\hline \text { Common Stock, \$5 par value } & \$ 500,000 & \$ 450,000 \
\hline \text { Paid-in capital in excess of par } & 948,000 & 853,000 \
\hline \text { Retained earnings } & 688,000 & 582,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The cash received from the sale of its common stock during Year 2 can be calculated by adding the increase in common stock and the increase in paid-in capital in excess of par. The common stock increased by $50,000 ($500,000 - $450,000) and the paid-in capital in excess of par increased by $95,000 ($948,000 - $853,000). Therefore, the total cash received from the sale of common stock is $50,000 + $95,000 = $145,000.

Bagwell's Net Income for the Year Ended December 31,Year 2