Question

The following information is from Smiley Company's comparative Balance Sheets: At December 31 2019 2018 Common Stock $4 par value $260,000 $220,000 Paid-in Capital in Excess of Par 490,000 426,000 Retained Earnings 510,000 485,000 Net Income for the year ended December 31, 2019 was $75,000 How much cash was received from the sale of its common stock during 2019?

Answer 1

Answer:

$180,000

Explanation:

The calculation of cash was received from the sale is shown below:-

Cash = Common stock of 2019 - Beginning Balance

= $260,000 - $220,000

= $40,000

Ending Balance = Beginning Balance - Cash

= $220,000 - $40,000

= $180,000

Therefore for computing the ending balance we simply deduct the Cash from Beginning balance.