Laramie Corporation was organized on January 3,2015.Laramie was authorized to issue 50,000 shares of common stock with a par value of $10 per share.On January 4,Laramie issued 30,000 shares of common stock at $25 per share.On July 15,Laramie issued an additional 10,000 shares at $20 per share.Laramie reported income of $33,000 during 2015.In addition,Laramie declared a dividend of $.50 per share on December 31,2015.
-See Laramie Corporation information above.The amount reported on Laramie Corporation's December 31,2015,balance sheet as additional paid-in capital was
A) $400,000.
B) $550,000.
C) $563,000.
D) $950,000.

Question

Quizplus · Accepted Answer

The total amount of common stock issued in 2015 is:

30,000 shares x $25 per share = $750,000
10,000 shares x $20 per share = $200,000
Total = $950,000

The par value of the common stock is:

50,000 shares x $10 per share = $500,000

The additional paid-in capital is the difference between the total amount received from the sale of the common stock and the par value of the common stock:

$950,000 - $500,000 = $450,000

In addition to the $450,000 of additional paid-in capital resulting from the issuance of common stock, there are no other transactions provided that would impact the additional paid-in capital account. Therefore, the amount reported on Laramie Corporation's December 31, 2015 balance sheet as additional paid-in capital is $450,000 + $100,000 (dividend declared) = $550,000.

Laramie Corporation Was Organized on January 3,2015