Problem 2 (7 points) The stockholders\' equity section on the December 31 balanc

Question

Problem 2 (7 points) The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? issued, 1,000 shares are held as treasury stock) of which S 116,000 17,690 Additional Paid-in Capital, Preferred Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,600 shares) Retained Earnings Treasury Stock, 1,000 Preferred shares at cost 699,600 36,000 9,800 Assume that no shares of treasury stock have been sold in the past. Complete the following statements 1. The number of shares of preferred stock issued was The number of shares of preferred stock outstanding was The average issue price of the preferred stock was The average issue price of the common stock was The treasury stock transaction increased (decreased) stockholder's equity by 2. 3. 4. 5. Per share Per share 6. The treasury stock cost 7. Total stockholder's equity is

Explanation / Answer

1) The number of preferred shares issued = Preferred Capital/Par Value per share

= $116,000/$20 = 5,800 shares

2) The number of preferred shares outstanding = Preferred shares issued - Treasury preferred shares

= 5,800 shares - 1,000 shares = 4,800 shares

3) Total contributed capital for preferred shares = Preferred capital+Additional paid-in capital, preferred

= $116,000+$17,690 = $133,690

Average Issue price per share = Total contributed capital for preferred shares/Preferred shares issued

= $133,690/5,800 shares = $23.05 per share

4) Average Issue price of common stock = Common Stock capital/Shares issued

= $699,600/6,600 shares = $106 per share

5) The treasury stock transaction decreased stockholder's equity by $9,800 (i.e. cost of treasury stock).

6) Treasury stock cost per share = Treasury stock/Treasury preferred shares

= $9,800/1,000 shares = $9.80 per share

7) Total stockholder's equity = Contributed preferred capital+Common stock+Retained earnings-Treasury stock

= $133,690+$699,600+$36,000-$9,800 = $859,490

Therefore total stockholder's equity is $859,490.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.