Holden Bicycles has 1,000 shares outstanding each with a par value of $0.10. If they are sold to shareholders at $10 each,what would the capital surplus be?
A) $100
B) $900
C) $9,900
D) $10,000
E) $11,000

Question

Quizplus · Accepted Answer

The total amount of capital raised from selling the 1,000 shares is:
$10/share x 1000 shares = $10,000
The par value of the shares is:
$0.10/share x 1000 shares = $100
Therefore, the capital surplus is:
$10,000 - $100 = $9,900

Holden Bicycles Has 1,000 Shares Outstanding Each with a Par