At December 31st, 2011, the records at a corporation provided the following sele

Question

At December 31st, 2011, the records at a corporation provided the following selected and incomplete data: Common stock (par $1; no changes during the year) Shares authorized, 3,000,000 Shares issued, issue price $65 per share Shares held as treasury stock, 85,000 shares, cost $40 per share Net income, $3,700,000 Common stock account, $1,400,000 Dividends declared and paid; $2 per share. Retained Earnings balance, January 1, 2011, $74,700,000 Find the following: (a) the shares issued (b) the shared outstanding (c) the balance in the Capital in Excess of par account (d) the EPS on net income (e) The total dividends paid on common stock during 2011 (f) The amount of treasury stock

Explanation / Answer

(a) the shares issued Par Value is $1. Common Stock Acct is $1400,000 So No of Shares issues = $1400,000/$1 = 1400,000 (b) the shared outstanding Shares O/S = Shares issued - Traesuy stock = 1400,000 - 85000 = 1315000 (c) the balance in the Capital in Excess of par account Shares issue price $65 Less Par value $1 = $64 Share prem So Capital in excess = $64*1400,000 = $89,600,000 (d) the EPS on net income EPS = Net Inc/No of shares o/s = $3700,000/1315,000 = $2.81 (e) The total dividends paid on common stock during 2011 Div Paid = $2*No fo share os = $2*1315,000 = $2630,000 (f) The amount of treasury stock 85,000 shares*cost $40 per share = $3,400,000

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