The following information comes from a balance sheet at December 31, 2015: Answe

Question

The following information comes from a balance sheet at December 31, 2015:

Answer the following questions:

A) How many shares of common stock are issued?

shares ____________

B) How many shares of common stock are outstanding?

shares __________________

C) Assuming that all shares were sold at the same price, what was the original selling price per share?

$ per share ______________________

D) If the company declares a 2-for-1 stock split on December 31, 2015, describe the resulting change, if any, in the balances in capital stock accounts and the par value of the common stock. ____________________________

Common Stock, $1 par, 1,000,000 shares authorized $160,000 Paid-in Capital in Excess of Par--Common Stock 120,000 Total Capital Stock 280,000 Retained Earnings 80,000 Less: Treasury Stock (4,000 common shares at cost) (40,000) Total Stockholders' Equity $320,000

Explanation / Answer

A)

Number of shares common stock issued = $160,000/$1 =160,000

B)

Number of shares common stock outstanding = 160,000-4,000 = 156,000

C)

Original selling price per share = ($160,000 + $120,000)/160,000 = $1.75

D)

Number of shares will be 312,000 (156,000 *2)

Par value of each = $1/2 = $ 0.5

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