The stockholders’ equity section on the December 31, 2014, balance sheet of Amer

Question

The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows: Stockholders’ Equity Contributed capital Preferred stock (par $26; authorized 15,000 shares, ? issued, of which 900 shares are held as treasury stock) $ 234,000 Common stock (no-par; authorized 22,000 shares, issued and outstanding 9,000 shares) 720,000 Contributed capital (includes $2,100 from treasury stock transactions) 20,100 Retained earnings 39,000 Cost of treasury stock, preferred

1.Calculate the number of shares of preferred stock issued-____

2.Calculate the number of shares of preferred stock outstanding_____

3.Calculate the average sale price of the preferred stock when issued. (Round your answer to 2 decimal places.)_____

4. Have the treasury stock transactions increased corporate resources or decreased corporate resources? By how much? (Enter the amount as positive value.)

5.By how much the treasury stock transactions increased (decreased) stockholders’ equity? (Enter the amount as positive value.)

6 How much did the treasury stock held cost per share? (Round your answer to 2 decimal places.)

7. Calculate the value of total stockholders’ equity

8. Calculate the average issue price of the common stock: (Round your answer to 2 decimal places.)

Explanation / Answer

Ans-

1.Calculate the number of shares of preferred stock issued

Preferred stock =234,000

Par Value=$26

No. of stock issued=234,000/26=9,000

2.

Calculate the number of shares of preferred stock outstanding

No. of stock issued=9,000

Less Treasury Shares=900

=8,100

3.

Calculate the average sale price of the preferred stock when issued

=Par Value=$26

4.

Have the treasury stock transactions increased corporate resources or decreased corporate resources? By how much

Treasury stock transactions decrease corporate resources by paying cash and extent to the buying price of treasury stock.

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