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Berry Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2012, the first year of the corporation's existence:
Sold 10,000 shares of common stock for $18 per share.
Issued 10,000 shares of common stock in exchange for a patent valued at $200,000.
At the end of the Berry's first year, total paid-in capital amounted to a. $80,000.
b. $180,000.
c. $200,000.
d. $380,000.

Respuesta :

Answer: Option (D) is correct.

Explanation:

(a) Common stock issued for cash:

Cash (10,000 shares @$18)                                $180,000

 To common stock (10,000 shares @$10 par)                    $100,000

 To Adding paid in capital (10,000 shares @$8)                 $80,000

(b) Common stock issued for patent:

Patent (market value of patent)                                $200,000

 To common stock (10,000 shares @$10 par)                           $100,000

 To Adding paid in capital (10,000 shares @$10)                      $100,000

(c) At the end of the Berry's first year,

Common stock = $200,000

Adding paid in capital = $180,000

Therefore,

Total paid-in capital = Common stock + Adding paid in capital

                                 = $200,000 + $180,000

                                 = $380,000

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