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The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows: Stockholders’...

The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows:


Stockholders’ Equity
Contributed capital
   Preferred stock (par $21; authorized 17,000 shares, ? issued,
     of which 700 shares are held as treasury stock)		 $ 126,000
   Common stock (no-par; authorized 24,000 shares, issued
      and outstanding 9,000 shares)		 801,000
   Contributed capital (includes $3,000 from treasury
     stock transactions)		 15,000
Retained earnings 48,000
Cost of treasury stock, preferred (16,800 )


Required:
1. Calculate the number of shares of preferred stock issued
Number of preferred shares issues?

     

2. Calculate the number of shares of preferred stock outstanding
Number of preferred shares outstanding

     

3.

Calculate the average sale price of the preferred stock when issued. (Round your answer to 2 decimal places.)
Average sales price per share?

     

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.)
Cost per share?

     

7. Calculate the value of total stockholders’ equity
Total stockholders equity?

     

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

     

Solutions

Expert Solution

Requirement 1) Number shares Preferred share Issues: 6000 Numbers

Amount Preferred Stock Issued /Par Value of Preferred Stock

126000 $/ 21$ =6000 Numbers             

Requirement 2) Number Preferred Share outstanding: 11000 Numbers

Authorized Preferred Stock – Issued Preferred Stock

17000 -6000 = 11000 Number

Requirement 3) Average Sale Price Price Per Share:42 $

average issue price per share of preferred stock: [(number of shares issued X par value) + paid in capital] / number of shares issued

[6000*21 $+126000 $]/6000 = 42$

Requirement 4) Treasury Stock Transaction Decreased Corporate Resources 2100 $

Preferred Stock Held by Treasury Stock in Par Value (700*21 $) =14700 $

Less : Cost of Treasury Stock                                                           =(16800 $)

Decrease in Amount of Corporate Resources      = (2100 $)

ekkarill92 answered 2 years ago
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