The Torre Company Has the Following Balances in Stockholders Equity

question 63

Essay

The Torre Company has the following balances in stockholders equity on December 31st.
Common Stock - $5.00 par, 60,000 issued $300,000
Additional paid in capital - common 600,000
Preferred stock - $100 par, 5,000 issued 500,000
Additional paid in capital - preferred 100,000
Retained earnings 200,000
Treasury stock (cost - $12.00 per share) 60,000
Answer the following questions:
1. How many shares of treasury stock are owned?
2. What was the average market price per share at which common stock was issued?
3. What was the average market price per share at which preferred stock was issued?
4. What is the total value of the Paid in Capital portion of stockholders equity?
5. What is the total value of stockholders equity?
6. How many shares of common stock are outstanding?
7. If net income for the year was $75,000 and a preferred stock dividend of $20,000 was paid,
what was the beginning value of retained earnings? How much is earnings per share for
the year?

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Definitions:

Premises

Statements or propositions from which a conclusion can be drawn, used as the basis for a logical argument.

Analogies

Comparisons made between two things that are alike in some respects, often used to explain or clarify concepts.

Conclusions

Statements or judgments that follow logically from the analysis of information, summarizing findings and providing closure on a subject or issue.

Slippery Slope

A logical fallacy or argument that suggests taking a minor action will lead to major and oftentimes negative consequences without providing evidence for such a drastic outcome.