Common Stock-calculate issue price and dividend amount. The balance sheet captio

Question

Common Stock-calculate issue price and dividend amount. The balance sheet caption for common stock is the following:

Common stock without par value, 2,000,000 shares authorized, 400,000shares issued, and 360,000 shares outstanding..................$2,600,000

a. Calculate the average price at which the shares were issued.
b. If these shares had been assigned a stated value of $1 each, show how the caption here would be different.
c. If a cash dividend of $.60 per share were declared, calculate the total amount of cash that would be paid to stockholders.
d. What accounts for the difference between issued shares and outstanding shares?

Explanation / Answer

2,600,000/400,000= 6.50
Common stock would be 400,000, paid in capital in excess of stated would be 2,200,000.
360,000*.60= 216,000
Treasury stock, stock the corporation has bought back but not retired.

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