Last minute question:
Pugh Co. reported the following in its statement of stockholders' equity on January 1 of the current year:
Common stock, $5 par value, authorized 200,000 shares, issued 100,000 shares $ 500,000
Additional paid-in capital 1,500,000
Retained earnings 516,000
Total 2,516,000
Less treasury stock, at cost, 5,000 shares (40,000)
Total stockholders' equity $ 2,476,000
The following events occurred during the current year:
May 1 – 1,000 shares of treasury stock were sold for $10,000.
July 9 – 10,000 shares of previously unissued common stock were sold for $12 per share.
October 1 – The distribution of a 2-for-1 stock split resulted in the common stock's per share par value being halved.
Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh's incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared.
The number of outstanding common shares at December 31 should be:
a. 212,000
b. 222,000
c. 216,000
d. 220,000
Why is the treasury stock sold (1000) an add? I thought it reduces CS outstanding, hence, a subtract?
NVM LOL.. I got this after googling haha. Jeez, think I am just nervous! Well..this is it time to head in the center.
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