Question

The corporate charter of Maine Yacht Corporation allows the issuance of a maximum of 3,000,000 shares of $1 par value common stock. During its first three years of operation, Maine issued 2,200,000 shares at $15 per share. It later acquired 30,000 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)-Authorised shares shares
(c)-How many shares were issued?
(d)-Shares issued shares How many shares are outstanding?
(e)-Outstanding shares shares.
(f)-What is the balance of the Common Stock account?
(g)-Balance of the Common Stock account $
(h)-What is the balance of the Treasury Stock account?
(i)-Balance of the Treasury Stock account $

Answer 1

Answer:

(i) 3,000,000 shares were authorized.

(ii) 2,200,000 shares were issued.

(iii) Shares Outstanding = Shares issued - Shares acquired as treasury stock

                                       = 2,200,000 - 30,000

                                       = 2,170,000

(iv) The balance of the Common Stock account:  

= Par value of common stock × Shares issued

= $1 × 2,200,000 shares

= $2,200,000

(v) The balance of the Treasury Stock account:

= Price per share × Shares acquired as treasury stock

= $25 × 30,000 shares

= $750,000