Answer:
Cash received from the sale of its common stock during Year 2 = $145,800
Explanation:
We are given the following information;
At December 31 | Year 2 | Year 1
Common Stock, $5 par value | 504,000 | 453,600
Paid-in capital in excess of par | 952,000 | 856,600
Retained earnings | 692,000 | 585,600
We are asked to compute the cash received from the sale of its common stock during Year 2, which is calculated using,
CR_2 = CS_2 + PC_2 - CS_1 - PC_1
Where
CR_2 = Cash received from the sale of its common stock during Year 2
CS_2 = Common stock in year 2
CS_1 = Common stock in Year 1
PC_2 = Paid in capital in excess of par in year 2
PC_1 = Paid in capital in excess of par in year 1
CR_2 = 504,000 + 952,000 - 453,600 - 856,600
CR_2 = 145,800
Therefore, cash received from the sale of its common stock during Year 2 is $145,800
