Question

Walton Corporation shows the following in the stockholders' equity section of its balance sheet: The stated value of its common stock is $0.50 and the total balance in the common stock account is $37,500. Also noted is that 5,000 shares are currently designated as treasury stock. The number of shares outstanding is

a. 80,000.
b. 75,000.
c. 72,500.
d. 70,000.

Answer 1

The answer is d. 70,000

Step-by-step explanation:

The common stock account has the balance of 37,500 while stated value of a common stock is $0.50 => Common stock issued is 37,500/0.5 = 75,000 shares.

The treasury stock account presents the balance of 5,000 common shares; which is the amount of common stocks hold by Walton Corporation through repurchase transaction which will decreased the number of stock outstanding.

Thus, the number of common shares outstanding = number of common shares issued - number of common shares in treasury stock account = 75,000 - 5,000 = 70,000 common shares.

Thus the answer is d. 70,000.