QUESTION 47 The founders of the Melanie Corporation invested $20,000,000 in the

Question

QUESTION 47

The founders of the Melanie Corporation invested $20,000,000 in the corporation and raised another $40,000,000 by having the corporation issue some of its $3 par common stock to the public. The corporation is authorized to issue a total of 10,000,000 common shares. For their investments, the founders received 5,100,000 common shares and other stockholders received 100,000 common shares.

Determine the dollar amount reported in the Corporation's common stock account after the 5,100,000 shares were issued to the founders and the 100,000 shares were issued to other stockholders.

$60,000,000

$5,200,000

$20,000,000

$15,600,000

$60,000,000

$5,200,000

$20,000,000

$15,600,000

Explanation / Answer

Dollar amount reported in the Corporation's common stock account :

Authorised Capital = $10,000,000 common shares

Issued capital = $5,100,000 common shares + $100,000 common shares

                       = 5,200,000 Common share .

Conclusion : Common share should be reported $5,200,000 because it is within tle limit of Authorised Capital.

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