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On January 1, 2006, Venus Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share. On December 31, 2006, Venus Corporation's common stock is trading at $13 per share.

Assuming Venus Corporation did not issue any more common stock in 2006, how does the increase in value of its outstanding stock affect Venus?

a) This increase in market value of outstanding stock is not recorded in the financial statements of Venus Corporation.

b) Each shareholder must pay an additional $5 per share to Venus.

c) Venus should recognize additional net income for 2006 of $5 per share, or $300,000.

d) Paid-in capital at December 31, 2006, is $780,000 (i.e. 60,000 shares times $13 per share)

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M976817

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