The following data are taken from the stockholders' equity section of the balance sheet of Driftwood Company: Common Stock, $10 Par Value, 60,000 Shares Authorized, 33,600 Shares $ 336,000 Issued, 31,600 Shares Outstanding Additional Paid-in Capital 168,000 Retained Earnings 140,000 Treasury Stock, 2,000 Shares 72,800 What was the average issue price per share of the common stock?

Question

Cassie Stout

Business

13 August, 04:31

The following data are taken from the stockholders' equity section of the balance sheet of Driftwood Company: Common Stock, $10 Par Value, 60,000 Shares Authorized, 33,600 Shares $ 336,000 Issued, 31,600 Shares Outstanding Additional Paid-in Capital 168,000 Retained Earnings 140,000 Treasury Stock, 2,000 Shares 72,800 What was the average issue price per share of the common stock?

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Ruger · Answer 1

Average issued Price excluding Treasury Shares

$15

Average issued Price excluding Treasury Shares

$13.01

Explanation:

Shares are issued on different prices their accumulated value is recorded in the common stock and add-in-capital account. Their average price can be calculated by dividing the total value of issuance and total issued shares.

We can calculate the Average price by following two method.

Average issued Price including Treasury Shares

Common stock = 33,600 shares x $10 = $336,000

Add-in-capital account excess of par = $168,000

Total issuance value = $336,000 + $168,000 = $504,000

average Issuance value = $504,000 / 33,600 = $15 per share

Average issued Price excluding Treasury Shares

Common stock = 33,600 shares x $10 = $336,000

Add-in-capital account excess of par = $168,000

Total issuance value = $316,000 + $168,000 - $72,800 = $411,200

average Issuance value = $411,200 / (33,600 - 2000) = $13.01 per share