Question

T Enterprises Balance Sheet (partial) At December 31, Year 4 Stockholders' Equity: Preferred stock ($50 par) $500,000 Common stock (S0.10 par) 30.000 Additional Paid in capital 7,520,000 Total paid in capital 8,050,000 Retained earnings 610,100 Treasury stock (5,000 common shares) (150,000) Total stockholders' equity $8,510,100 1. How many shares of preferred stock have been issued? 2a. How many shares of common stock have been issued? 2b. How many of the common shares are outstanding? 3. If the common shares were issued at $25 per share, at what average price per share were the preferred shares issued? $ 4. If retained earnings at the beginning of the period was $548,200 and $128,900 was earned in net income, what was the amount of dividends declared during the year? $ 5. What was the average cost per share of the treasury stock acquired? $_
please show all the work

Answer 1

1.preferred stock issued ($500,000/$50 par)	10,000
2a.common stock issued ($30,000/0.10 par)	300,000
2b .common stock outstanding (300,000 issued - 5000 treasury stock)	295,000
3 average price per share of preferred shares (see note)	$55
4 amount of dividends (beginning retained earnings + net income - closing retained earnings) (548,200+128,900-610,100)	67,000
5 average cost per share of treasury stock ($150,000/5000)	$30

working:

average price per preferred shared :

additional paid in capital belonging to common stock = ($25 issue price - 0.10 par value) *300,000 shares =>7,470,000.

so additional paid in capital belonging to preferred stock will be = (7,520,000-7,470,000)=>50,000.

so premium per share of preferred stock = $50,000 / 10,000 shares =>$5.

issue price = $50 par value + $5 premium =.$55.