Johnson Company's capital stock is currently trading for $22 per share.The following accounts appear on the balance sheet:
$\begin{array} { l }
\text { Common stock, } \$ 6.00 \text { par value per share, } 10,000 \text { shares issued }&\$60,000 \
\text { Paid in capital in excess of par value }&\$200,000 \
\end{array}$

The only transaction affecting the accounts was one issue of the company's common stock.What was the original selling price of the common stock?

Question

Johnson Company's capital stock is currently trading for $22 per share.The following accounts appear on the balance sheet:
$\begin{array} { l  }
\text { Common stock, } \$ 6.00 \text { par value per share, } 10,000 \text { shares issued }&\$60,000 \
 \text { Paid in capital in excess of par value }&\$200,000 \
\end{array}$

The only transaction affecting the accounts was one issue of the company's common stock.What was the original selling price of the common stock?

Quizplus · Accepted Answer

The original selling price of the common stock can be calculated by adding the par value per share to the paid-in capital in excess of par value per share. The total contributed capital is $260,000 ($60,000 from common stock at par and $200,000 from paid-in capital in excess of par), divided by 10,000 shares, equals $26.00 per share.

Johnson Company's Capital Stock Is Currently Trading for $22 Per