The balance sheet caption for common stock is the following: Common stock withou

Question

The balance sheet caption for common stock is the following:


Common stock without par value, 2,000,000 shares authorized,
400,000 shares issued, and 360,000 shares outstanding $2,600,000

Required:
(a)

Calculate the average price at which the shares were issued. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Price $

(c)

If a cash dividend of $.60 per share were declared, calculate the total amount of cash that would be paid to stockholders. (Omit the "$" sign in your response.)

Cash $

(d) What accounts for the difference between issued shares and outstanding shares?

Explanation / Answer

a. Average price at which shares issued = Balance sheet amount / Number of shares issued

Average price at which shares issued = $2,600,000 / 400,000

Average price at which shares issued = $6.50 per share

c. Total dividend = Rate per share * Number of shares outstanding

Total dividend = $0.60 * 360,000

Total dividend = $216,000

d. Treasury stock accounts for the difference between shares issued and shares outstanding.

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