RKJ Company has provided the following information:
• 100,000 shares of $5 par value common stock are authorized
• 70,000 shares have been issued
• 65,000 shares are outstanding
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The 70,000 shares of issued common stock were issued for $9 per share.
Which of the following statements is correct?
A)Common stock is reported at $630,000 on the balance sheet.
B)Additional paid-in capital is reported at $260,000 on the balance sheet.
C)Common stock is reported at $350,000 on the balance sheet.
D)Treasury stock is reported at $45,000 on the balance sheet.

Question

RKJ Company has provided the following information:
 • 100,000 shares of $5 par value common stock are authorized
• 70,000 shares have been issued
• 65,000 shares are outstanding
-
The 70,000 shares of issued common stock were issued for $9 per share.
Which of the following statements is correct?
A)Common stock is reported at $630,000 on the balance sheet.
B)Additional paid-in capital is reported at $260,000 on the balance sheet.
C)Common stock is reported at $350,000 on the balance sheet.
D)Treasury stock is reported at $45,000 on the balance sheet.

Quizplus · Accepted Answer

Common stock is reported at par value, which is $5 per share, and the company has 65,000 outstanding shares, so common stock is reported at $325,000 ($5 per share x 65,000 shares) on the balance sheet. Additional paid-in capital is calculated as the difference between the total amount paid for the issued shares ($9 per share x 70,000 shares = $630,000) and the par value of the shares issued ( $5 per share x 70,000 shares = $350,000), which equals $280,000. Therefore, the total equity reported on the balance sheet would be $605,000 ($325,000 in common stock + $280,000 in additional paid-in capital). Treasury stock is not mentioned in the information provided, so there is no basis for including it in the answer.

RKJ Company Has Provided the Following Information