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30 December, 07:15

The following data is available for Marigold Service Corporation at December 31, 2021: Common stock, par $10 (authorized 29600 shares) $242000 Treasury Stock (at cost $15 per share) $ 600 Based on the data, how many shares of common stock have been issued?

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  1. 30 December, 09:25
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    Common stock issued as at December 31, 2021 is 24,200 ($242,000/$10).

    Explanation:

    Since the dollar value of common stock is $242,000 with a par value of $10. It means that $242,000/$10 has been issued.

    The number of authorized shares is always higher than the issued shares.

    The value of issued shares is determined by the total number issued multiplied by the par value.

    The Treasury Stock of 400 shares at cost $15 per share is a contra entry to the Common Stock. It represents the shares repurchased from former shareholders and held by the company in its treasury. It reduces equity and is not taken into account in paying dividends.

    On the other hand, the issued Common Stock is the equity shares currently held by shareholders, who have voting rights and share in dividends.

    The authorized share capital represents the total shares which is authorized in the Memorandum of Association of the company.
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