Question

The corporate charter of ROK Corporation allows the issuance of a maximum of 600,000 shares of $2 par value common stock. During the first three years of operation, Torres issued 200,000 shares at $13 per share. It later acquired 80,000 of these shares as treasury stock for $20 per share.

1. How many shares of stock were authorized?

2. How many shares of stock were issued?

3. How many shares of stock are outstanding?

4. What is the balance in the common stock account?

5. What is the balance in the treasury stock account?

Answer 1

1.

Number of authorized shares = 600,000

2.

Number of issued shares = 200,000

3.

Number of outstanding shares = Number of issued shares - Number of shares repurchased

= 200,000-80,000

= 120,000

4.

Balance in common stock account = Number of common shares issued x Par value per share

= 200,000 x 2

= $400,000

5.

Balance in treasury stock account = Number of shares repurchase x Cost per share

=80,000 x 2

= $160,000

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