Question

Marvin Corporation has the following information reported on the balance sheet as of December 31 of the current year: Common Stock, $10 par value (authorized 20,000 shares) $50,000 Treasury Stock (2000 shares) $30,000 Based on the information above, how many shares of common stock are outstanding? Group of answer choices 20,000 2000 5000 3000

Answer 1

5,000

Step-by-step explanation:

When a company sells stock they must record the value of the stock sold at par value in the common stock account. Any extra money received should go to the capital paid-in excess of par value account.

In this case, Marvin's common stack account equals $50,000. In order to find out how the number of outstanding stocks, we just divide $50,000 by $10 (par value) = 5,000 stocks.