Question

The following items were shown on the balance sheet of Weslyn Corporation on December 31, 2015:...

The following items were shown on the balance sheet of Weslyn Corporation on December 31, 2015:

Stockholder’s Equity

    Paid-in capital

        Capital Stock

                 Common Stock. $10 par value, 400,000 shares

                  Authorized; _____ shares issued and _____ outstanding…………….. $1,850,000

Additional paid-in capital

                      In excess of par……………………………………………………… 165,000

                           Total paid-in capital…………………………………………….... 2,015,000

Retained earnings……………………………………………………………………. 750,000

             Total paid-in capital and retained earnings…………………………………. 2,765,000

Less: Treasury Stock (18,000 shares)……………………………………………….. 270,000

           Total stockholder’s equity…………………………………………………… $2,495,000

Complete the following statements and show computations.

The number of shares of common stock issued was _____________

The number of shares of common stock outstanding was _________

The sales price of the common stock when issued was $__________

The cost per share of the treasury stock was $______________

The average issue price of the common stock was $___________

Assuming that 25% of the treasury stock is sold at $20 per share, the balance in the Treasury Stock account would be $____________

Business   Accounting   
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Homework Answers

Answer #1

Solution:

1. Number of shares of common stock issued = Capital stock value / Par vale per share

= $1,850,000 / $10 = 185,000 common shares

2. Number of shares of common stock outstanding = Shares of common stock issued - Shares in Treasury Stock

= 185000- 18000 = 167,000 Common shares

3. Sales price of the common stock when issued = Common stock value + Additional paid in capital in excess of Par = $1850000 + $165000 = $2,015,000

4. Cost per share of the treasury stock = Treasury stock / shares in treasury stock = $270000/ 18000 = $15

5. Average issue price of the common stock = Sale price of common stock when issued / Number of Common shares issued = $2015000 / 185000 = $10.89189 or say $10.89

6. Balance in the Treasury Stock account = Total Treasury stock - 25% of treasury stock

= $270,000 - (270,000*25%) = $202,500

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