This company was incorporated as a new business on January 1, 2015. The company
ID: 2459479 • Letter: T
Question
This company was incorporated as a new business on January 1, 2015. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, 2015, the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share. Net income for the year ended December 31, 2015 was $375,000. Refer to Lanier Tech. What is the amount of the company’s total capital stock at December 31, 2015? a. $60,000 b. $180,000 c. $350,000 d. $120,000
Explanation / Answer
Given company Authorized to issue 50,000 shares of $5 par Common stock and on January1,2015 company issued 8,000 shares of common stock for $15 per share
Common stock = 8,000 shares * $5= $40,000
Premium on shares = ($15 - $5) * 8000 shares = $80,000
Company Authorized to issue 10,000 shares of 6%, of $10 par Preferred stock and on January1, 2015 company issued 2,000 shares of preferred stock for $30 per share
Preferred stock = 2,000 shares * $10 = $20,000
Premium on shares = 2,000 shares * ($30 - $10) = $40,000
The company's total capital stock at December 31, 2015 = $40,000+ $20,000= $60,000