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.

In Pugh's December 31, 1990, statement of stockholders' equity, the par value of the issued common stock should be:

Answer is $550,000. At year-end there will be 220,000 shares issued with a par value of $2.50.

I can't think out why the answer is that. Not sure if my brain not work properly today or this is a difficult question.

But thanks in advance is you could help.