Lamar Company had the following transactions in 2013, its first year of operations. • Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share. • Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par. • Earned net income of $35,000. • Paid no dividends. At the end of 2013, what is the total amount of Paid-in capital? a. $415,000 b. $280,000 c. $120,000 d. $380,000

Lamar Company had the following transactions in 2013, its first year of operations. • Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share. • Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par. • Earned net income of $35,000. • Paid no dividends. At the end of 2013, what is the total amount of Paid-in capital? a. $415,000 b. $280,000 c. $120,000 d. $380,000

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

Lamar Company had the following transactions in 2013, its first year of operations.

• Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share.

• Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par.

• Earned net income of $35,000.

• Paid no dividends.

At the end of 2013, what is the total amount of Paid-in capital?

$415,000

$280,000

$120,000

$380,000

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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