The stockholders equity section on the December 31, 2011, balance sheet of Ameri

Question

The stockholders equity section on the December 31, 2011, balance sheet of American Corp as follows:
Contributed capital
Preferred stock (par $20; authorized 10,000 shares, (issued
of which 500 shares are held as treasury stock) $100,000
Common stock (no-par; authorized 20,000 shares, issued
and outstanding 8,000 shares) 600,000
Contributed capital (includes $1,500 from treasury
stock transactions) 16,500
Reatined earnings 34,000
Cost of treasury stock, preferred (9,500)

Complete the following statements and show your computations:
1. The number of share of preferred stock issued was
2. The number of shares of preferred stock outstanding was
3. The average sale price of the preferred stock when issued was $ per share
4. Have the treasury stock transactions (A) increased corporate resources or (B)
decreased resources? By How Much?
5. The treasury stock transactions increased (decreased) stockholder's equity by
6. How much did the treasury stock held cost per share?
7. Total stockholder's equity is $
8. The average issue price of the common stock was $

Explanation / Answer

1. 100,000/20=5000 sh issued 2. 5,000sh-500sh=4,500sh 3.100,000/4500=$22.22/sh 4. A. $1500 5. 500*20=$10,000 $10,000-$1,500=$8,500 6. 1,500/500=3 20+3=$23/sh 7. 100,000+600,000+16,500+34,000-9,500=741,000 8. 600,000/8000=$75 15,000/800=$1,875 $75/sh+$1.875/sh=$76.875/sh

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