The following are the transactions for Smiley, Inc. 1. The company is authorized

Question

The following are the transactions for Smiley, Inc.
1. The company is authorized to sell 1,000,000 shares of $10 par value common stock and 50,000 shares of $100 par value 6 percent preferred stock.
2. As of the end of the current year, the company has actually sold 550,000 shares of common stock at $12 per share
3. It has also sold 40,000 shares of preferred stock at $110 per share.
4. 40,000 shares have been repurchased at $60 per share and are currently being held in treasury to be used to meet the future requirements of a stock option plan that the company intends to implement.
implement. Please show work ...thanks in advance.

Explanation / Answer

Amount received after selling 555000 shares at $12 a share= $ 555000*12 = $ 6,660,000 Amount received after selling 40000 shares at $110 a share= $ 40000*110 = $ 4,400,000 Amount spent after buying 40000 shares at $60 a share = $ 40000*60 = $ 2,400,000 thus, amount left with smiley inc. = ($ 6,660,000 + $ 4,400,000) - 2,400,000 = $ 11,060,000 - $ 2,400,000 = $ 8,660,000

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