95 CHAPTER 3 Financial Statements and Ratio Analysis initial sale price of commo
ID: 397626 • Letter: 9
Question
95 CHAPTER 3 Financial Statements and Ratio Analysis initial sale price of common stock Haymitch Brewing Corporation has one issue of preferred stock and one issue of common stock outstanding. Given Haymitch's stockholders' equity account that follows, determine the original price per share at which the firm sold its single issue of common stock. P3-9 Stockholders' Equity ($000) S 225 Preferred stock Common stock ($0.50 par, 400,000 shares outstanding) common stock Total stockholders' equity Paid-in capital in excess of par on 2,600 800 $3,825 Retained earningsExplanation / Answer
Capital raised on sale of common stock = $200,000
Paid in capital in excess of par on common stock = $2,600,000
Total capital that was raised from the sale = Capital raised on sale of common stock + Paid in capital in excess of par on common stock
= $200,000 + $2,600,000
= $2,800,000
Total shares outstanding = 400,000
Price per share of common stock = Total capital that was raised from the sale / Total shares outstanding
= $2,800,000 / 400,000
= $7 per share
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