1. Common Products has issued its $.001 par value stock in two separate financin
ID: 2694432 • Letter: 1
Question
1. Common Products has issued its $.001 par value stock in two separate financing transactions. Transaction 1: five years ago, the founder of the company purchased 2,000,000 shares of stock for $450,000. Transaction 2: last year the company went public by issuing 20,000,000 shares of stock to the public for $32 million. Use this information to fill in the following table: Common shares (par value) ____________________ Additional paid-in capital ____________________ Retained Earnings ____________________ Net Equity $34,000,000Explanation / Answer
Common Shares (Par Value) = (2,000,000 + 20,000,000)x 0.001 = 22,000
Additional Paid in capital = (450,000 + 32,000,000) - 22,000 = 32,428,000
Retailed Earnings
Owners equity = Contributed Capital + Retained Earnings
Retained earnings = Equity - contributed capital
= 34,000,000 - 32,450,000 = 1,550,000
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