The corporate charter of Llama Co.authorized the issuance of 10 million,$1 par common shares.During 2016,its first year of operations,Llama had the following transactions:
What amount should Llama report as additional paid-in capital in its December 31,2016,balance sheet?

Question

The corporate charter of Llama Co.authorized the issuance of 10 million,$1 par common shares.During 2016,its first year of operations,Llama had the following transactions: 
What amount should Llama report as additional paid-in capital in its December 31,2016,balance sheet?

Quizplus · Accepted Answer

To calculate the additional paid-in capital, we need to subtract the common stock balance from the total amount received from issuing the shares. 
Total amount received from issuing shares = 6,200,000 shares x $20 per share = $124,000,000 
Common stock balance = 6,200,000 shares x $1 per share = $6,200,000 
Additional paid-in capital = $124,000,000 - $6,200,000 = $117,800,000 
Therefore, the answer is B, which is the closest option to the calculated amount.

The Corporate Charter of Llama Co