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On January 1, 2002, Sony Corporation issued 80,000 shares of its total 200,000 authorized shares of $3 par value common stock for $10 per share. On December 31, 2002, Sony Corporations common stock is trading at $15 per share.

Assuming Sony Corporation did not issue any more common stock in 2002, how does the increase in value of its outstanding stock affect Sony?

A.            Sony should recognize additional net income for 2002 of $5 per share, or $400,000.

B.            Paid-in capital at December 31, 2002, is $1,200,000 (i.e. 80,000 shares times $15 per share).

C.            This increase in market value of outstanding stock is not recorded in the financial statements of Sony Corporation.

D.            Each shareholder must pay an additional $5 per share to Sony.

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