Answer:
The amount Crimson should report for additional paid-in capital (or paid-in capital—excess of par) upon issuing the stock is $25,500.
Explanation:
Additional paid-in capital is the excess of market value of common stock over the face value of common stock. Therefore, the amount Crimson should report for additional paid-in capital can be calculated as follows:
Face value of common stock = Number of shares issued * Price per share = $1,500 * $3 = $4,500
Since if the bonds had been issued separately they would have sold at 102, this implies that the market value of the bonds is 102% of the face value of the bond. Therefore, we have:
Bonds market value = Bonds face value * 102% = $90,000 * 102% = $91,800
Market value of common stock = Combined cash amount - Bonds market value = $121,800 - $91,800 = $30,000
Therefore, we have:
Additional paid-in capital = Market value of common stock - Face value of common stock = $30,000 - $4,500 = $25,500
Therefore, the amount Crimson should report for additional paid-in capital (or paid-in capital—excess of par) upon issuing the stock is $25,500.
