The following items were shown on the balance sheet of Weslyn Corporation on Dec
ID: 2410338 • Letter: T
Question
The following items were shown on the balance sheet of Weslyn Corporation on December 31, 2015:
Stockholder’s Equity
Paid-in capital
Capital Stock
Common Stock. $10 par value, 400,000 shares
Authorized; _____ shares issued and _____ outstanding…………….. $1,850,000
Additional paid-in capital
In excess of par……………………………………………………… 165,000
Total paid-in capital…………………………………………….... 2,015,000
Retained earnings……………………………………………………………………. 750,000
Total paid-in capital and retained earnings…………………………………. 2,765,000
Less: Treasury Stock (18,000 shares)……………………………………………….. 270,000
Total stockholder’s equity…………………………………………………… $2,495,000
Complete the following statements and show computations.
The number of shares of common stock issued was _____________
The number of shares of common stock outstanding was _________
The sales price of the common stock when issued was $__________
The cost per share of the treasury stock was $______________
The average issue price of the common stock was $___________
Assuming that 25% of the treasury stock is sold at $20 per share, the balance in the Treasury Stock account would be $____________
Explanation / Answer
Solution:
1. Number of shares of common stock issued = Capital stock value / Par vale per share
= $1,850,000 / $10 = 185,000 common shares
2. Number of shares of common stock outstanding = Shares of common stock issued - Shares in Treasury Stock
= 185000- 18000 = 167,000 Common shares
3. Sales price of the common stock when issued = Common stock value + Additional paid in capital in excess of Par = $1850000 + $165000 = $2,015,000
4. Cost per share of the treasury stock = Treasury stock / shares in treasury stock = $270000/ 18000 = $15
5. Average issue price of the common stock = Sale price of common stock when issued / Number of Common shares issued = $2015000 / 185000 = $10.89189 or say $10.89
6. Balance in the Treasury Stock account = Total Treasury stock - 25% of treasury stock
= $270,000 - (270,000*25%) = $202,500
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