Question

The following correctly prepared entries without explanations pertain to corners corporation. event number account title debit credit 1. cash 1,250,000 1. common stock 750,000 1. paid-in capital in excess of par value 500,000 2. treasury stock 23,200 2. cash 23,200 3. cash 22,000 3. treasury stock 18,400 3. paid-in capital in excess of cost of treasury stock 3,600 the original sale (entry 1) was for 500,000 shares, and the treasury stock was acquired for $4 per share (entry 2).

required
a. what was the sales price per share of the original stock issue?

Answer 1

The sales price per share of the original stock issue for Corners Corporation was $2.50, calculated by dividing the total cash received ($1,250,000) by the number of shares (500,000).

Step-by-step explanation:

To determine the sales price per share of the original stock issue for Corners Corporation, we focus on entry 1 in the provided information. Entry 1 indicates that the total cash received for the stock is $1,250,000, comprising $750,000 for common stock and $500,000 for paid-in capital in excess of par value. The sale involved 500,000 shares.

The formula to calculate the sales price per share is:

\[ \text{Sales Price per Share} = \frac{\text{Total Cash Received}}{\text{Number of Shares}} \]

Substituting the values, we get:

\[ \text{Sales Price per Share} = \frac{$1,250,000}{500,000} \]

Solving this, the sales price per share is $2.50.

Therefore, based on the information provided, the original stock of Corners Corporation was issued at a price of $2.50 per share. This calculation reflects the average price at which the company raised capital from the issuance of common stock and paid-in capital in excess of par value during this particular stock offering.