Question

The stockholders' equity section of the balance sheet of Crammond Corporation at December 31, appears as...

The stockholders' equity section of the balance sheet of Crammond Corporation at December 31, appears as follows:

Stockholders' Equity
$2 preferred stock, $100 par, 10,000 shares authorized $ 670,000
Common stock, $1 par, 100,000 shares authorized 72,000
Additional Paid-in Capital:
From issuance of preferred stock 165,000
From issuance of common stock 710,000
Total paid-in capital 1,617,000
Retained earnings 835,000
Total Stockholders' equity $ 2,452,000

How many shares of common stock are outstanding?

  • 110,000.

  • 100,000.

  • 72,000.

  • 77,000.

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Answer #1

Answer:

Option C: 72,000

Explanation:

here the total amount in the common stock is $72,000

And the par value per share is $1

Therefore, Number of shares of common stock are outstanding is calculated as follows:

Number of  common stocks outstanding = Total common stock ÷ par value per share

= $72,000 ÷ $1

= 72,000 shares

Eventhough 100,000 shares are authorized only 72,000 shares are issued and autstanding. The Additional Paid-in Capital of common stock includes the amount of cash which is bought by shareholders for this 72,000 shares in excess of the par value $1 per share.

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