4. 0.10 points The stockholders\' equity section on the December 31, 2014, balan

Question

4. 0.10 points The stockholders' equity section on the December 31, 2014, balance sheet of American Corporation follows: f American Corporation Stockholders' Equity Contributed capital Preferred stock (par $26; authorized 15,000 shares,? issued, of which 900 shares are held as treasury stock) Common stock (no-par; authorized 22,000 shares, issued $234,000 and outstanding 9,000 shares) Contributed capital (includes $2,100 from treasury 720,000 stock transactions) Retained earnings Cost of treasury stock, preferred 20,100 39,000 (20,700) Required 1. Calculate the number of shares of preferred stock issued Number of preferred shares issued 2. Calculate the number of shares of preferred stock outstanding Number of preferred shares outstanding

Explanation / Answer

1. No. of prefered stock issued = $234000/$26 = 9000 shares

2. No. of preffered stock outstanding = No. of shares issued - treasury stock

= 9000 - 900 = 8100

3. Contributed capital of preffered stock = 20100 - 2100 = 18000

Average sales price of preffered stock = (234000+18000)/9000 = $28

4. Purchase of treasury stock results in outflow of cash from company therefore treasury stock have decreased the resources.

5. Treasury stock have decreased the resources by $20700.

6. Treasury stock's cost per share = 20700/900 = $23

7. Statement showing value of stockholder's equity

8. Average issue price of common stock = $720000/22000 = $80

Prffered stock 234000 common stock 720000 Contributed capital 20100 Retained earnings 39000 Treasury stock (20700) 992400

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.