Purchase Solution

Issued Shares and Outstanding Shares

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The balance sheet caption for common stock is the following:
Common stock without par value, 2,000,000 shares authorized, 400,000 shares issued, and 360,000 shares outstanding; \$2,600,000

a) Calculate the average price at which the shares were issued;
Price= \$

b) If a cash dividend of \$0.60 per share were declared, calculate the total amount of cash that would be paid to stockholders.
Cash=

c) What accounts for the difference between issued shares and outstanding shares?

Solution Summary

This solution illustrates how to use the balance sheet to find the average price at which the shares were issued and to compute the cash dividend paid. It also discusses the difference between issued and outstanding shares.

Solution Preview

(a) The average price at which shares were issued = \$2,600,000/400,000 = \$6.50

(b) If a cash ...

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