Question

Danley Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $40,000. The year-end balance sheet would showa. Common Stock of $1,000,000.b. Common Stock of $4,800,000.c. total paid-in capital of $4,760,000.d. total paid-in capital of $3,800,000.

Answer 1

Answer:

Common Stock of $1,000,000.

d. Total paid-in capital of $3,800,000.

Explanation:

When the company report a par value, the total common stock are valued at this par value, which is, $5 * 200.000 = $1.000.000

Rest of the capital it's reported as Paid in Capital = (24-5)*200.000 = $3.800.000, Total stockholders' equity $4.800.000.

The total net loss of $40.000 it's reported as retained earning (deficit) , so the net loss impact the total stockholders' equity but no the Common stock or the Paid in capital balance.