A company issued 60 $100 par value ordinary shares for $7,000 cash. The total amount of paid-in capital is:

Question

Quizplus · Accepted Answer

Paid-in capital is the amount received from the sale of stock above the par value. In this case, the company issued 60 shares for $7,000 cash, which means the stock was sold for $116.67 per share ($7,000 ÷ 60). The par value of each share is $100, so the amount of paid-in capital is $16.67 per share ($116.67 - $100) multiplied by 60 shares, which equals $1,000 ($16.67 x 60 = $1,000). Therefore, the correct answer is D) $6,000 (not E) $7,000, which is just the total amount of cash received for the sale of the stock).

A Company Issued 60 $100 Par Value Ordinary Shares for $7,000