Hello! I’ve been working on an exercise for one of my classes and I’ve been unable to solve one of the problems, I am given the following information:
Common stock $ 1,600,000
Retained earnings $ 900,000
Net income $ 1,000,000
Shares issued 90,000
Shares outstanding 80,000
Dividends declared and paid $ 800,000
The common stock was sold at a price of $20 per share.
What is the amount of capital in excess of par?
What was the amount of retained earnings at the beginning of the year?
How do I determine capital in excess of par and retained earnings from this information?
Additionally, I tried entering 900,000 for retained earnings but was told by the computer that 900,000 was not the correct answer.
Shares Issued 90,000 x $20 = 1,800,000 – 1,600,000 at par value = 200,000 Capital in Excess of Par
Retained Earnings at end of year – 900,000
Less Net Income – 1,000,000
Plus Dividends declared – 800,000
Retained Earnings, beginning of year – 700,000