Question

Preferred Stock, 7%, $115 par $1,170,000 Common Stock, $1.50 par 300,000 Paid in capital in excess of par, common stock 1,200,000 Retained earnings 2.500.000 Total $5,170,000 Based on the information above, how many shares of common stock are classified as issued?

A. 1,500,000
B. 1,000,000
C. 300,000
D. 200,000

Answer 1

D. 200,000

Step-by-step explanation:

As per given information

Preferred Stock, 7%, $115 par $1,170,000

Common Stock, $1.50 par $300,000

Paid in capital in excess of par, common stock $1,200,000

Retained earnings $2,500,000

Total $5,170,000

As common stock is reported on the par value we can calculate the number of share by simply dividing total value with par value.

Common Stock = $300,000

Number of shares = Common stock paid in capital / Par value

Number of shares = $300,000 / $1.50

Number of shares = 200,000 shares

200,000 share are classified as issued shares.