Alpha Company ssued 1000 shares of s0 par value common sock to socshioleser each

Question

Alpha Company ssued 1000 shares of s0 par value common sock to socshioleser eachiange fo $5000 as ics of se lowing coecty cescrbes he impactof this transaction on Alpha's stockholds n exchange fo: 515 000 cash. Which of the following correctly descrbes the impact of this transaction orn fnancial statements? O Stockholders have invested $25,000 as stockholders equity O Common snock is reported at $15.000 in stockholders' equity O Additional paidin capital of $5,000 is reported in stocknolders equity O A $15,000 investment is reported es o long term Iinivestment

Explanation / Answer

1,000 shares of $10 par value were issued for $15,000.

Par value of the 1,000 shares = 1,000 x $10 = $10,000

The $5,000 received by the company from the stockholders in excess of the par value of the shares will be reported as additional paid-in capital in stockholders' equity.

Therefore, the correct answer is Additional paid-in capital of $5,000 is reported in stockholders' equity.

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