eported the following information at December 31: Preferred Stock, $3 par, 10,00
ID: 2390999 • Letter: E
Question
eported the following information at December 31:
Preferred Stock, $3 par, 10,000 shares authorized
$ 8,700
Additional paid-in capital – preferred stock
17,400
Common stock, $2.50 par, 16,000 shares authorized
20,000
Additional paid-in capital – common stock
8,800
Retained earnings
27,000
Treasury stock, at cost of $5 per share
(3,000
)
Total
$78,900
How many shares of common stock are outstanding?
Preferred Stock, $3 par, 10,000 shares authorized
$ 8,700
Additional paid-in capital – preferred stock
17,400
Common stock, $2.50 par, 16,000 shares authorized
20,000
Additional paid-in capital – common stock
8,800
Retained earnings
27,000
Treasury stock, at cost of $5 per share
(3,000
)
Total
$78,900
Explanation / Answer
Common Stock shares issued = Value of Common Stock/Par Value per share
= $20,000/$2.50 = 8,000 shares
Treasury Stock outstanding = Treasury Stock/Cost per share
= $3,000/$5 = 600 shares
Common Stock shares outstanding = Common Stock issued - Treasury Stock outstanding
= 8,000 shares - 600 shares = 7,400 shares
Therefore the number of common shares outstanding is 7,400 shares.
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