The stockholders' equity section of the balance sheet of Crammond Corporation at December 31, appears as follows:
|$2 preferred stock, $100 par, 10,000 shares authorized||$||670,000|
|Common stock, $1 par, 100,000 shares authorized||72,000|
|Additional Paid-in Capital:|
|From issuance of preferred stock||165,000|
|From issuance of common stock||710,000|
|Total paid-in capital||1,617,000|
|Total Stockholders' equity||$||2,452,000|
How many shares of common stock are outstanding?
Option C: 72,000
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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