Fixit Corporation issued 20,000 shares of $20 par value common stock at its current market price of $32.How does this event affect total stockholders' equity?

Question

Quizplus · Accepted Answer

The event increases assets and stockholders' equity by $640,000 (or $32 per share × 20,000 shares).The increase in stockholders' equity is divided into two parts,$400,000 of par value (or $20 per share × 20,000 shares)and $240,000 ($640,000 - $400,000)received in excess of par value.

Fixit Corporation Issued 20,000 Shares of $20 Par Value Common