The following items were shown on the balance sheet of Freelander Corporation on

Question

The following items were shown on the balance sheet of Freelander Corporation on 12/31/2009:
Stockholders' Equity
Paid in Capital
Common stock, $5 par value, 10,000,000 shares
authorized; ___shares issued and ____outstanding $ 20,000
Additional paid-in capital in excess of par value 5,000
Total paid-in capital $ 25,000
Retained Earnings $ 8,000
Total paid-in capital and retained earnings $ 33,000
Less: Treasury stock (800 shares) $ (6,400)
Total stockholders' equity $ 26,600

1) The number of shares of common stock issued were ______________

2) The number of shares of common stock outstanding are _____________

3) The average issue price of the common stock was ____________________

4 The average cost per share of the treasury stock was ______________________

5) A $0.15 per share dividend is declared, how much will the dividend payable be? ________________

6) If a company had 10,000 shares issued and outstanding with a par value of $2; answer the following questions if the company declared a 4 for 1 stock split:
a. What is the dollar amount of common stock before the split?

b. What would be the outstanding share after the split?

c. What would be the par value after the split?

d. What is the dollar amount of common stock after the split?

Explanation / Answer

1) The number of shares of common stock issued were 4,000 shares
    $20,000 / $5
2) The number of shares of common stock outstanding are 3,200 shares
     4,000 shares issued - 800 Treasuray Stock
3) The average issue price of the common stock was $6.25
    [(number of shares issued X par value) + paid in capital] / number of shares issued
     [(4,000 x $5) + $5,000] / 4,000
4 The average cost per share of the treasury stock was     $8
    $6,400 / 800
5) A $0.15 per share dividend is declared, how much will the dividend payable be? $480
3,200 shares @ $0.15 = $480

6) If a company had 10,000 shares issued and outstanding with a par value of $2; answer the following questions if the company declared a 4 for 1 stock split:

a. What is the dollar amount of common stock before the split? $20,000
     10,000 shares x $2

b. What would be the outstanding share after the split? 40,000
    10,000 x 4

c. What would be the par value after the split? $0.50
    $2 / 4

d. What is the dollar amount of common stock after the split? $20,000
     40,000 shares @ $0.50

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