Question

A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. what will be the effect on total stockholders' equity?

Answer 1

Stockholders' equity decreased as a result of rising expenses and dividend payments to common and preferred shareholders.

• $350000 less is held by stockholders overall.
• Given: A corporation buys 10,000 shares at a price of $35 each.
• determining the cost of common stock now
• Purchase price for common shares was 10000 * 35, or $350,000.
• $350000 was spent on the common stock.

What happens when a firm divides its equity four to one?

500 of the company's 1,000 shares of common stock with a $5 par value were sold after the company purchased 1,000 shares for $10. The market value of the stock will also decrease if the corporation issues a 4 for 1 stock split.

When you refer to paid-in capital above par value, what do you mean?

Paid-In Capital Greater Than Par Value Paid-in Capital in Excess of Par Value, which denotes the value of a share of stock, is the amount awarded per share in the corporate charter.

Learn more about total stockholders' equity:

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