Ransom Corporation issued 10,000 shares of $5 par common stock for $22 per share. As a result of this transaction, Ransom's legal capital increased by $50,000.

Question

Quizplus · Accepted Answer

The legal capital of a corporation is its total par value of all issued shares. In this case, the par value of the 10,000 shares of common stock is $5, so the legal capital increased by 10,000 x $5 = $50,000. The fact that the shares were sold for $22 per share is irrelevant to the legal capital calculation.

Ransom Corporation Issued 10,000 Shares of $5 Par Common Stock