Question

For a recent 2-year period, the balance sheet of Blue Company showed the following stockholders’ equity data at December 31 (in millions). 2020 2019 Additional paid-in capital $ 970 $ 827 Common stock 560 555 Retained earnings 7,250 5,280 Treasury stock 1,620 868 Total stockholders’ equity $7,160 $5,794 Common stock shares issued 224 222 Common stock shares authorized 500 500 Treasury stock shares 36 28 (a) Answer the following questions. (1) What is the par value of the common stock? (Round par value to 2 decimal places, e.g. $3.15.) Par value of common stock $enter the par value of the common stock rounded to 2 decimal places

Answer 1

Answer:

Par value of common stock is $2.5

Explanation:

The par value of common stock can determined by dividing the common stock total amount in each of the two years by the shares issued and outstanding in each year as demonstrated below:

2019:

Par value of common stock =Common stock($)/shares issued

common stock($) is $555 million

shares issued and outstanding is 222 million shares

par value of common stock=$555 million/222 million=$2.5

2020:

Par value of common stock =Common stock($)/shares issued

common stock($) is $560 million

shares issued and outstanding is 224 million shares

par value of common stock=$560 million/224 million=$2.5

Ultimately the par value of common stock as shown be computations for both years is $2.5