Problem 11-30B Analysis of Stockholders\' Equity The Stockholders\' Equity secti

Question

Problem 11-30B Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31 balance sheet of Lion Company appears as follows: Preferred stock, $30 par value, 5,000 shares authorized, ??? shares issued Common stock, ??? par, 10,000 shares authorized, 7,000 shares issued Additional paid-in capital-Preferred Additional paid-in capital-Common Additional paid-in capital-Treasury stock Total contributed capital Retained earnings Less: Treasury stock, preferred, 100shares Total stockholders' equity 120,000 70,000 6,000 560,000 1,000 $ 757000 40,000 (3.200) s ?? Required Determine the following items based on Lion's balance sheet. 1·The number of shares of preferred stock issued 2. The number of shares of preferred stock outstanding 3. The average per-share sales price of the preferred stock when issued 4. The par value of the common stock 5. The average per-share sales price of the common stock when issued 6. The cost of the treasury stock per share 7. The total stockholders' equity

Explanation / Answer

Question 1

The par value per share is $30. If the Total Value of the Preferred Stock is 120,000, then the number of shares issued

is 120,000/30 = 4,000 shares.

Question 2

Since 100 shares of preferred stock are Treasury Stock(Stocks bought back) the remaining shares are outstanding.

Hence outstanding Shares = 4,000 - 100 = 3,900

Question 3

The issue proceeds from preference issue is Preferred Stock Value + Additional paid-in capital - Preferred Stock =

120,000 + 6,000 = 126,000

Hence the average sales price = 126,000/4,000 = $31.50

Question 4

Par Value X Issed Shares = Value. Hence the par value of common stock is:

70,000/7,000 = $10

Question 5

Per share issue price = (70,000 + 560,000)/7,000 = $90 per share

Question 6

The cost per treasury stock 3200/100 = $32

Question 7

THe total stockholders equity is

Total Contributed Capital + Retained Earnings - Treasury Stock = 757000 + 40000 - 3200 = 793,800

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