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A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is: Multiple Choice $6,000. $100. $600. $1,000. $7,000.

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is: Multiple Choice $6,000. $100. $600. $1,000. $7,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 31
**Question:** A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is: **Multiple Choice:** 1. $6,000. 2. $100. 3. $600. 4. $1,000. 5. *$7,000.* **Explanation:** **Paid-in Capital:** Paid-in capital is the total amount of cash or other assets that stockholders have paid to the company in exchange for shares of ownership. In this case, the company issued 60 shares of $100 par value common stock, which would indicate that the par value of the shares amounts to $6,000 (60 shares * $100 par value per share). However, because the shares were issued for $7,000, the total paid-in capital includes both the par value and any excess amount above par value. Here, the paid-in capital is the total cash received, which is $7,000. So, the correct answer is $7,000.
Transcribed Image Text:**Question:** A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is: **Multiple Choice:** 1. $6,000. 2. $100. 3. $600. 4. $1,000. 5. *$7,000.* **Explanation:** **Paid-in Capital:** Paid-in capital is the total amount of cash or other assets that stockholders have paid to the company in exchange for shares of ownership. In this case, the company issued 60 shares of $100 par value common stock, which would indicate that the par value of the shares amounts to $6,000 (60 shares * $100 par value per share). However, because the shares were issued for $7,000, the total paid-in capital includes both the par value and any excess amount above par value. Here, the paid-in capital is the total cash received, which is $7,000. So, the correct answer is $7,000.
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