Bagwell's net income for the year ended December 31,Year 2 was $185,000.Information from Bagwell's comparative balance sheets is given below.Compute the cash received from the sale of its common stock during Year 2. $\begin{array}{lrr}
\text { At December } 31 & \text { Year 2 } & \text { Year } 1 \
\text { Common Stock, \$5 par value } & \$ 500,000 & \$ 450,000 \
\text { Paid-in capital in excess of par } & 948,000 & 853,000 \
\text { Retained earnings } & 688,000 & 582,000
\end{array}$
A)$185,000.
B)$106,000.
C)$95,000.
D)$50,000.
E)$145,000.

Question

Quizplus · Accepted Answer

To calculate the cash received from the sale of its common stock during Year 2, we need to consider both the increase in common stock at par value and the increase in paid-in capital in excess of par. The common stock increased by $50,000 ($500,000 - $450,000), and the paid-in capital in excess of par increased by $95,000 ($948,000 - $853,000). Adding these two amounts gives us the total cash received from the sale of common stock: $50,000 + $95,000 = $145,000.

Bagwell's Net Income for the Year Ended December 31,Year 2