Pugh Co. reported the following in its statement of equity on January 1:Common

Ten thousand shares of $10 par value common stock were issued initially
May 5, 2020
In Year 1, Rona Corp. issued 5,000 shares of $10 par value common
May 5, 2020

Pugh Co. reported the following in its statement of equity on January 1: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

$2,516,000

Minus: Treasury stock, at cost, 5,000 shares

(40,000)

Total equity

$2,476,000

The following events occurred during the year:

May 1

1,000 shares of treasury stock were sold for $10,000.

July 9

10,000 shares of previously unissued common stock 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.

In Pugh’s December 31 statement of equity, the par value of the issued common stock should be

$550,000

$530,000

$275,000

$265,000

 
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