Reference no: EM132564357

The owners of a new venture have decided to organize as a corporation. The initial equity investment is valued at $100,000 reflecting contributions of the entrepreneur and her family and friends. One hundred thousand shares of stock were initially issued.

Question 1: What dollar amount would initially be recorded in the common stock account?

Question 2: If a par value on the common stock was set at $.01 per share, show how the initial equity investment would be recorded.

Question 3: Now assume that 20,000 additional shares of stock are sold to an angel investor at $5 per share six months after the initial incorporation.

Assuming both issues did not have par value, calculate and provide components of the stockholders equity.
Assuming the first issue had a par value of $ 0.01 and the second issue had a par value of $0.04, calculate and provide components of the stockholders' equity.

Question 4: At the end of the first year of operation, the venture recorded an operating loss of $80,000. Assuming the $.01 par value in item 3 above, show the dollar amounts in the common stock account, the additional paid-in-capital account, and the retained earnings account at the end of one year. Also indicate the cumulative amount in stockholders' equity at the end of one year.