Question

Beck Corp. issued 200,000 shares of common stock when it began operations in Year 1 and...

Beck Corp. issued 200,000 shares of common stock when it began operations in Year 1 and issued an additional 100,000 shares in Year 2. Beck also issued preferred stock convertible to 100,000 shares of common stock. In Year 3, Beck sold another 75,000 shares of its common stock. In Year 4, Beck purchased 20,000of its stock and held in treasury. At the end of Year 3, how many shares of Beck's common stock were outstanding?

a) 400,000

b) 355,000

c) 475,000

d) 375,000

Business   Accounting   
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Answer #1

Outstanding shares are shares held by shareholders of the company. Any shares that are bought back are reduced from the same.

In this case the company has issued convertible bonds, however they would be included in outstanding shares as and when they are converted into equity shares.

Shares issued at beginning of year 1 200,000
Additional Shares Issued in Year 2 100,000
Shares Issued in Year 3 75,000
Shares bought back ( to be reduced) (20,000)
Total Outstanding common stock / Shares 355,000

Thus option B) 355,000 is correct answer

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