Asked by Samende Kamana on May 03, 2024
Verified
Excess of Issue Price over Par
(Preferred) = Excess Price of Preferred Stock × Number of Shares of Preferred Stock Issued =
($70 - $50) × 3,000 = $20 × 3,000 = $60,000
A) Treasury stock
B) Retained earnings
C) Preferred stock
D) Excess of issue price over par (preferred)
E) Common stock
F) Total paid-in capital
G) Excess of issue price over par (common)
H) Total stockholders' equity
Issue Price Over Par
Occurs when a security, typically a bond, is sold at a price higher than its face value.
Preferred Stock
A class of shares which typically provides a fixed dividend and has priority over common stock in the distribution of assets during liquidation.
Shares
Shares representing ownership rights in a corporation or financial asset, guaranteeing a fair share of profits through dividends, if declared.
- Gain familiarity with the process of determining retained earnings and their value in stockholders' equity.
Verified Answer
EM
Eboni MontagueMay 10, 2024
Final Answer :
D
Explanation :
The calculation provided directly matches the definition of "Excess of issue price over par (preferred)," which is the additional amount paid by shareholders over the par value of the preferred stock. This is calculated as the difference between the issue price and the par value, multiplied by the number of shares issued.
Learning Objectives
- Gain familiarity with the process of determining retained earnings and their value in stockholders' equity.