Question

Towson Corp., was organized on January 2, 2018. During the first year of operation, Towson issued 50,000 shares of $9 par value common stock at a price of $35 cash per share. On December 31, 2018, Towson reported Net Income of $250,000 and paid $50,000 cash dividends. Use this information to determine the dollar amounts that Towson will report on its year end Balance Sheet for Paid in Capital Common Stock in Excess to par.

Answer 1

Paid in capital common stock in excess of par includes the share price issued in excess of par value that is it contains issue price less par value of common stock.
Calculation of paid in capital stock in excess of par to be reported in balance sheet.
Paid in capital stock in excess of par = Number of shares issued*(Issue price - Par value of share)
Paid in capital stock in excess of par = 50,000*($35 - $9)
Paid in capital stock in excess of par = 50,000*$26
Paid in capital stock in excess of par = $1,300,000
Thus, the dollar amount that Towson will report on its year end balance sheet for Paid in capital common stock in excess to par is $1,300,000.