Asked by Jordan Tongen on Jul 13, 2024
Verified
The following information is provided for Spring Company: Retained earnings $35,000 Preferred stock, 5%,$50 par 100,000 Organization expense 2,500 Premium on common stock ? Additional paid-in capital from recall of preferred stock 1,000 Premium on bonds payable 3,000 Common stock, $10 par 300,000\begin{array}{ll}\text { Retained earnings } & \$ 35,000 \\\text { Preferred stock, } 5 \%, \$ 50 \text { par } & 100,000 \\\text { Organization expense } & 2,500 \\\text { Premium on common stock } & ? \\\text { Additional paid-in capital from recall of preferred stock } & 1,000 \\\text { Premium on bonds payable } & 3,000 \\\text { Common stock, } \$ 10 \text { par } & 300,000\end{array} Retained earnings Preferred stock, 5%,$50 par Organization expense Premium on common stock Additional paid-in capital from recall of preferred stock Premium on bonds payable Common stock, $10 par $35,000100,0002,500?1,0003,000300,000
If total contributed capital is $406, 000, what is the amount of premium on common stock for Spring Company?
A) $2, 500
B) $3, 500
C) $5, 000
D) $6, 000
E) none of these
Contributed Capital
Contributed Capital, also known as paid-in capital, refers to the amount of money raised by a company through the sale of its equity shares.
Premium on Common Stock
The amount by which the sale price of a share of common stock exceeds its par value.
Organization Expense
Costs incurred in the creation and organization of a corporation, such as legal fees, that may be amortized over time.
- Grasp the accounting treatments for contributed capital, including premiums and discounts.
Verified Answer
Learning Objectives
- Grasp the accounting treatments for contributed capital, including premiums and discounts.
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