Wendell Company provided the following pertaining to its recent year of operation: • Common stock with a $10,000 par value was sold for $50,000 cash.
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.
• Net income was $70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value and a $23,000 market value.
• Treasury stock costing $9,000 was sold for $7,000.
How much did Wendell's contributed capital increase during the recent year of operation?
A) $15,000.
B) $73,000.
C)$58,000.
D)$75,000.

Question

Quizplus · Accepted Answer

Contributed capital increased by $50,000 from the sale of common stock and decreased by $2,000 from the sale of treasury stock at a loss ($9,000 cost - $7,000 sale price). The stock dividend does not affect contributed capital as it involves a transfer within equity. Therefore, the net increase in contributed capital is $50,000 - $2,000 = $48,000.

Wendell Company Provided the Following Pertaining to Its Recent Year