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Working with common stock, par value and contributed capital

Larry Corporation's charter allows it to sell 400,000 shares of $1 par value common stock. To date the firm has sold 150,000 shares for a total of $1,050,000. Larry has reacquired 3,000 shares from shareholders at a price of $10 per share. Retained earnings equals $350,000. What total amount of contributed capital should Larry report? What amount should be reported for the common stock account? What was the average selling price of each share of common stock? How many shares of stock are outstanding? What amount should be reported for stockholder's equity?

Solution Preview

Stage 1: Larry's has 400,000 shares X $1/share = $400,000 available for sale.
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<br>Stage 2: Larry's has sold 150,000 shares X $7/share = $1,050,000. (This is the $ amount received.) Thus they only have 250,000 shares remaining to be sold.
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<br>Stage 3: Larry has reacquired ...

Solution Summary

Stage 1: Larry's has 400,000 shares X $1/share = $400,000 available for sale.

Stage 2: Larry's has sold 150,000 shares X $7/share = $1,050,000. (This is the $ amount received.) Thus they only have 250,000 shares remaining to be sold.

Stage 3: Larry has reacquired 3,000 shares X $10/share = $30,000. Thus they now have 253,000 shares in their possession and have net cash proceeds of $1,020,000.

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