The stockholders’ equity section on the December 31, 2009, balance sheet of Chem

Question

The stockholders’ equity section on the December 31, 2009, balance sheet of Chemfast Corpo-ration reported the following amounts: Contributed Capital Preferred Stock ( par $ 20; authorized 10,000 shares, ? issued, of which 500 shares are held as treasury stock) $ 104,000 Additional Paid- in Capital, Preferred 14,300 Common Stock ( no- par; authorized 20,000 shares, issued and outstanding 8,000 shares) 600,000 Retained Earnings 30,000 Preferred Treasury Stock, 500 shares at cost 9,500 Assume that no shares of treasury stock have been sold in the past. Required: Complete the following statements and show your computations.

1. The number of shares of preferred stock issued was .
2. The number of shares of preferred stock outstanding was .
3. The average issue price of the preferred stock was $ per share.
4. The average issue price of the common stock was $ .
5. The treasury stock transaction increased ( decreased) stockholders’ equity by .
6. The treasury stock cost $ per share?
7. Total stockholders’ equity is $ .

Explanation / Answer

1.The numberof shares of preferred stock issued was 9,500 shares 2.The number of shares of preferred stock outstanding 9,500 shares 3.The average issue price of the preferred stock was $ per share $114 500 shares cost $104,000 Each share = 104,000/500=$208 Average issue price of the preferred stock was $20 + $208=228/2=$114 4,The average issue price of the common stock $600,000/8,000 = $75 5.The treasury stock transaction decreased stockholder's equity. 6.The treasury stock cost $19 per share   (Treasury stock for 500 shares at cost 9,500 Each share cost 9,500/500 = 19 7.Total stockholders' equity is $634,800 Working: Common stock8,000 shares   $600,000 Additional preferred capital         14,300 Retained earnings                       30,000                                              _________                                                644,300 Less:Cost of treasury stock          9,500                                              ________ Total stockholders' equity        634,800

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