If a company issues 60,000 shares at $0.25 each with a par value of $0.20 each, what is the resulting contributed surplus?

To determine the contributed surplus from the issuance of shares, it's essential to understand the difference between the issue price of the shares and their par value.

When the company issues 60,000 shares at $0.25 each, the total amount raised from the sale of these shares is 60,000 multiplied by $0.25, which equals $15,000. The par value is the nominal value of the shares, which is $0.20 in this case. Therefore, the total par value of the shares issued is 60,000 multiplied by $0.20, resulting in $12,000.

Contributed surplus is calculated by subtracting the total par value from the total amount raised. In this scenario, the calculation for the contributed surplus would be:

Contributed Surplus = Total raised - Total par value

Contributed Surplus = $15,000 - $12,000 = $3,000

Thus, the contributed surplus from the issuance of these shares is indeed $3,000. This surplus represents the additional amount received over and above the par value of the shares, which is a critical aspect of equity financing for the company.