| Posted: 15 Jul 2010 at 23:58 | IP Logged
|
|
|
What about the following question CPA-01491, same fact patterns but, they ask for the number of outstanding common shares at Dec 31, 1990?
It seems they excluded TS stock ? any thoughts why they would be different?
Question CPA-01491
Pugh Co. reported the following in its statement of stockholders' equity on January 1, 1990:
Common stock, $5 par value, authorized 200,000 shares, issued 100,000 shares $ 500,000
Additional paid-in capital 1,500,000
Retained earnings 516,000
2,516,000
Less treasury stock, at cost, 5,000 shares (40,000)
Total stockholders' equity $2,476,000
The following events occurred in 1990:
May 1 - 1,000 shares of treasury stock were sold for $10,000.
July 9 - 10,000 shares of previously unissued common stock were sold for $12 per share.
October 1 - The distribution of a 2-for-1 stock split resulted in the common stock's per share par value being
halved.
Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh's incorporation protect shares
held in treasury from dilution when stock dividends or stock splits are declared.
The number of outstanding common shares at December 31, 1990, should be:
a. 222,000
b. 220,000
c. 216,000
d. 212,000
Explanation
Choice "d" is correct. $212,000.
Original shares outstanding 100,000
Less: Shares in treasury (5,000)
Plus: Treasury shares sold 1,000
Plus: New shares issued 10,000
Total shares O/S before split 106,000
Two-for-one stock split x2
Shares O/S after stock split 212,000
|
Active Topics 
Memberlist 
Search 
Help
Register 
Login
Topic: Par value of issued common stock
Topic Closed)
