The corporate charter of Lite Corporation allows the issuance of a maximum of 2,

Question

The corporate charter of Lite Corporation allows the issuance of a maximum of 2,500,000 shares of $1 par value common stock. During its first year of operation, Lite issued 1,500,000 shares at $15 per share. It later acquired 30,000 of these shares as treasury stock for $25 per share.

******Instructions Based on the above information, answer the following questions:

(a) How many shares were authorized?

(b) How many shares were issued?

(c) How many shares are outstanding?

(d) What is the balance of the Common Stock account?

(e) What is the balance of the Treasury Stock account?

Explanation / Answer

a 2,500,000 shares are authorized to issue b 1,500,000 shares are issued c 1,470,000 (1,500,000-30,000) shares are outstanding d $1,470,000 (1,470,000*$1 per share) is the balance in common stock account e $750,000 ($25*30,000) is the balance in treasury stock account

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