Question

Stewart soaps began business by issuing 25,000 shares of $5 par value common stock for $20 per share. during its first year, the corporation sustained a net loss of $5,000. the year-end balance sheet would show

Answer 1

Issuing 25,000 shares of $5 par value common stock for $20 per share.

Cash (25,000 x 20)                           500,000
         Common stock (25,000 x 5)                          125,000
         Additional Paid-In Capital (25,000 x 15)           375,000
 
The net loss will only be reflected as a deduction from retained earnings. Retained earnings is where the net income or net loss of the company will be under in the year-end balance sheet. It is the balance of all income and loss the company has since its inception.