The balance sheet caption for common stock is: Common stock, no par value, 15,000,000 shares authorized, 9,200,000 shares issued, 8,900,000 shares outstanding Required: $ 1,104,000,000 a). Calculate the average price at which the shares were issued. b). If these shares had been assigned a stated (par) value of $10 each, show how the above caption would be different. c). Calculate the total amount of cash that would be paid to stockholders if a cash dividend of $1.50 per share were declared.
The balance sheet caption for common stock is: Common stock, no par value, 15,000,000 shares authorized, 9,200,000 shares issued, 8,900,000 shares outstanding Required: $ 1,104,000,000 a). Calculate the average price at which the shares were issued. b). If these shares had been assigned a stated (par) value of $10 each, show how the above caption would be different. c). Calculate the total amount of cash that would be paid to stockholders if a cash dividend of $1.50 per share were declared.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**Common Stock Accounting Questions**
The following is a balance sheet caption for common stock:
**Common stock**
- No par value
- 15,000,000 shares authorized,
- 9,200,000 shares issued,
- 8,900,000 shares outstanding
**Value:** $1,104,000,000
**Required:**
a) Calculate the average price at which the shares were issued.
b) If these shares had been assigned a stated (par) value of $10 each, show how the above caption would be different.
c) Calculate the total amount of cash that would be paid to stockholders if a cash dividend of $1.50 per share were declared.
**Instructions for Calculations:**
a) **Average Price Calculation:**
To find the average price per share at which the shares were issued, divide the total value of the issued shares by the number of shares issued.
Formula:
\[
\text{Average Price per Share} = \frac{\text{Total Value of Issued Shares}}{\text{Number of Shares Issued}}
\]
Calculation:
\[
\text{Average Price per Share} = \frac{1,104,000,000}{9,200,000} \approx \$120
\]
b) **Caption Difference with Par Value:**
If the shares had a stated (par) value of $10 each, the caption would include this detail and be structured to show par value and any additional paid-in capital.
Example of Caption with Par Value:
```
Common stock, $10 par value, 15,000,000 shares authorized, 9,200,000 shares issued, 8,900,000 shares outstanding
Common Stock at Par Value (9,200,000 * $10) $92,000,000
Additional Paid-in Capital $1,012,000,000
Total $1,104,000,000
```
c) **Cash Dividend Calculation:**
To find the total amount of cash paid to stockholders for a $1.50 per share dividend, multiply the dividend per share by the number of shares outstanding.
Formula:
\[
\text{Total Dividend Payment} = \text{Dividend per Share} \times \text{Number of Shares Outstanding}
\]
Calculation:
\[
\text](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f0128e8-6553-498c-afa0-dd14e88e258d%2F6e2dfa2f-0e86-43c5-befb-792dc745234e%2Fztle76_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Common Stock Accounting Questions**
The following is a balance sheet caption for common stock:
**Common stock**
- No par value
- 15,000,000 shares authorized,
- 9,200,000 shares issued,
- 8,900,000 shares outstanding
**Value:** $1,104,000,000
**Required:**
a) Calculate the average price at which the shares were issued.
b) If these shares had been assigned a stated (par) value of $10 each, show how the above caption would be different.
c) Calculate the total amount of cash that would be paid to stockholders if a cash dividend of $1.50 per share were declared.
**Instructions for Calculations:**
a) **Average Price Calculation:**
To find the average price per share at which the shares were issued, divide the total value of the issued shares by the number of shares issued.
Formula:
\[
\text{Average Price per Share} = \frac{\text{Total Value of Issued Shares}}{\text{Number of Shares Issued}}
\]
Calculation:
\[
\text{Average Price per Share} = \frac{1,104,000,000}{9,200,000} \approx \$120
\]
b) **Caption Difference with Par Value:**
If the shares had a stated (par) value of $10 each, the caption would include this detail and be structured to show par value and any additional paid-in capital.
Example of Caption with Par Value:
```
Common stock, $10 par value, 15,000,000 shares authorized, 9,200,000 shares issued, 8,900,000 shares outstanding
Common Stock at Par Value (9,200,000 * $10) $92,000,000
Additional Paid-in Capital $1,012,000,000
Total $1,104,000,000
```
c) **Cash Dividend Calculation:**
To find the total amount of cash paid to stockholders for a $1.50 per share dividend, multiply the dividend per share by the number of shares outstanding.
Formula:
\[
\text{Total Dividend Payment} = \text{Dividend per Share} \times \text{Number of Shares Outstanding}
\]
Calculation:
\[
\text
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