The following information was taken from the records of Falcon, Inc: Common stoc

Question

The following information was taken from the records of Falcon, Inc:

Common stock, ($2 par value per share, 1,000,000 shares authorized,

            750,000 shares issued)                                                              1,500,000

Preferred stock 5% cumulative ($8 [corrected] par value per share, 20,000

            shares authorized, 4,000 shares issued)                                    $    32,000

Additional paid in capital, common stock                                               3,000,000

Additional paid in capital, preferred stock                                                       8,000

Retained earnings                                                                                      460,000

____ 29. Based on the information provided, Common stock must have been issued at an average price of:

a.    $1.50

b.    $4.50

c.    $6.00

____ 30. Based upon the information provided, Preferred stock must have been issued at an average price of:

$1.60

$2.00

$10.00

Explanation / Answer

Average price= Shares amount at par value+Additional Paid up capital/No. of shares Issued

Common Stock= ($3000000+1500000)/750000=$6 Ans. C

Preferred Stock=($32000+$8000)/4000=$10

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