QUESTION #4 The corporate charter of Hunter Corporation allows the issuance of a

Question

QUESTION #4 The corporate charter of Hunter Corporation allows the issuance of a maximum of 2,500,000 shares of $1 par value common stock. During its first three years of operation, Hunter issued 1,500,000 shares at $15 per share. It later acquired 30,000 of these shares as treasury stock for $25 per share. Instructions Based on the above information, answer the following questions (a) How many shares were authorized? (b) How many shares were issued? (c) How many shares are outstanding? (d) What is the balance of the Common Stock account? (e) What is the balance of the Treasury Stock account?

Explanation / Answer

(a) How many shares were authorized?

2,500,000 shares (maximum shares allowed for issuance)

(b) How many shares were issued?

1,500,000 (shares issued)

(c) How many shares were outstanding?

1,470,000 (issued shares - treasury stock 30,000 shares)

(d) What is the balance of the common stock account?

$1,500,000 (1,500,000 shares x 1 par value)

(e) What is the balance of Treasury stock account?

$750,000 (30,000 shares x 25)

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