Question

The corporate charter of Concord Corporation allows the issuance of a maximum of 4,300,000 shares of $1 par value common stock. During its first three years of operation, Michael issued 2,060,000 shares at $15 per share. It later acquired 88,000 of these shares as treasury stock for $25 per share. Based on the above information, answer the following questions:

a. How many shares were authorized?
b. How many shares were issued?
c. How many shares are outstanding?
d. What is the balance of the Common Stock account?
e. What is the balance of the Treasury Stock account?

Answer 1

a. 4,300,000 shares

This is the maximum issuance allowed by the Corporate Charter so is the authorized share quantity.

b. 2,060,000 shares were issued as per the question

c. Number of shares outstanding = Number of shares issued - Treasury shares

= 2,060,000 - 88,000

= 1,972,000 shares

d. Balance in Common stock account:

= Number of shares issued * par value

= 2,060,000 * 1

= $2,060,000

e. Balance in Treasury:

= 800,000 * 25

= $2,200,000