Question

Beck Corp. issued 200,000 shares of common stock when it began operations in year 1 and issued an additional 100,000 shares in year 2. Beck also issued preferred stock convertible to 100,000 shares of common stock. In year 3, Beck purchased 75,000 shares of its common stock and held it in Treasury. At December 31, year 3, how many shares of Beck's common stock were outstanding?

Answer 1

225,000 shares

Step-by-step explanation:

Common stock outstanding, Dec 31, year 1 = 200,000

Common stock outstanding, Dec 31, year 2:

= 200,000 + 100,000

= 300,000

Common stock outstanding, Dec 31, year 3:

= 300,000 - 75,000**

= 225,000

Therefore, 225,000 shares of Beck's common stock were outstanding.

**Repurchase of common stock reduces the number of shares outstanding.