Question

Angel Enterprises reported the following stockholder’s equity at year-end: Preferred Stock, 3%, $200 Par, 10,000 shares authorized, 600 shares outstanding $120,000 Common Stock, $? Par, 1,000,000 shares authorized, 77,000 shares outstanding 231,000 Paid-in Capital in Excess of Par - Common 770,000 Retained Earnings 1,040,000 Treasury Stock (500 shares @ $25 per share) 12,500 What is the par value per share of Angel’s Common Stock?

Answer 1

Answer:

Par value of common stock = $10 per share.

Explanation:

Provided information we have the following:

3% Preferred stock = $200 par 600 shares outstanding = $120,000

Common stock = shares outstanding = 77,000

$231,000 = Paid in capital

$770,000 Par Common stock

Thus, Common stock par value = $770,000/77,000 = $10 per share.

Note: when the information about equity or preference capital is placed in balance sheet only outstanding and treasury shares are considered, authorized capital is not considered, as that represents the maximum number of shares a company can issue.

Thus, par value of common stock = $10 per share.