Question

When common stock is issued by a corporation for a cash price above par value, the excess of the cash proceeds over the par value should be reported in the financial statements as a(n): O a. Addition in the Equity section O b. Subtraction in the Equity section Oc Addition in the Investments section Od. Subtraction in the Investments section The following accounts appear in the ledger of Moyer Corporation on December 31: $70,000 Preferred Stock Common Stock 46,000 7,000 Additional Paid-in Capital, Preferred Additional Paid-in Capital, Common Retained Earnings 18,000 40,000 A balance sheet prepared on December 31 would report total stockholders' equity of O $116,000 Ob. $156.000 O $131,000 Qd $141,000 $181.000 5:00 PRY Time

Answer 1

When common stock is issued by a corporation for a cash price above par value, the excess of the cash proceeds over the par value should be reported in the financial statements as an addition in the Equity section. This excess is known as Additional Paid-in Capital or APIC, and it represents the amount of money that investors pay above the par value of the stock in order to invest in the company.

Regarding the second part of the question, the total stockholders' equity of Moyer Corporation on December 31 would be $156,000. This is calculated by adding the amounts of Preferred Stock, Common Stock, Additional Paid-in Capital for both Preferred and Common stock, and Retained Earnings.

Preferred Stock: $70,000 Common Stock: $46,000 Additional Paid-in Capital, Preferred: $18,000 Additional Paid-in Capital, Common: $7,000 Retained Earnings: $40,000

Total Stockholders' Equity: $70,000 + $46,000 + $18,000 + $7,000 + $40,000 = $156,000

Therefore, the answer is option b. Addition in the Equity section for the first part of the question and option b. $156,000 for the second part of the question.

Step-by-step explanation: