Question

The balance sheet caption for common stock is the following: Common stock without par value, 3,700,000 shares authorized, 760,000 shares issued, and 710,000 shares outstanding $ 3,500,000 Required: Calculate the average price at which the shares were issued. If these shares had been assigned a stated value of $1 each, show how the caption here would be different. If a cash dividend of $0.14 per share were declared, calculate the total amount of cash that would be paid to stockholders. What accounts for the difference between issued shares and outstanding shares?

Answer 1

Value of common stock	$   3,500,000
Number of shares issued	760,000
Average issue price per share ($3,500,000/760,000)	$      4.60526

Common stock ($1 stated value, 3,700,000 shares authorized, 760,000 shares issued and 710,000 shares outstanding)	$      760,000
Paid in capital In excess of stated value - Common stock	$   2,740,000

Number of shares outstanding	710,000
Dividend per share	$       0.14
Cash paid to stockholders	$   99,400

Different between issue shares and outstanding shares are treasury stock shares. company bought back their own shares and kept with them.

You can reach me over comment box if you have any doubts. Please rate this answer