On January 1, 2015, Juniper Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share. On December 31, 2015, Juniper Corporation's common stock is trading at $12 per share.
Required information
Refer to the information above. Assuming Juniper Corporation did not issue any more common stock in 2015, how does the increase in value of its outstanding stock affect Juniper?
1. Juniper should recognize additional net income for 2015 of $4 per share, or $240,000.
2. Paid-in capital at December 31, 2015, is $720,000 (i.e., 60,000 shares times $12 per share).
3. This increase in market value of outstanding stock is not recorded in the financial statements of Juniper Corporation.
4. Each shareholder must pay an additional $4 per share to Jupiter.