The shareholders' equity sections of Samuels Company as reported on the balance
Sheets for December 31 were:
$$\begin{array} { | l | r | r | }
\hline &{ \mathbf { 2 0 1 7 } } & { \mathbf { 2 0 16 } } \
\hline \text { Preferred stock (9\%, } \$ 50 \text { par value) } & \$ 200,000 & \$ 120,000 \
\hline \begin{array} { l }
\text { Common stock (\$10 par value, } 750,000\text { shares} \
\text { autharized, } 54,000 \text { issued and } 5,000\text { held in} \
\text { treasury) }
\end{array} & 540,000 &3 9 6 , 0 0 0 \
\hline \text { Additianal paid-in capital: } & & \
\hline \text { Preferred stock } &155,000 &5 5 , 0 0 0 \
\hline \text { Camman stock } & 3 3 6 , 0 0 0 & 30 0 , 0 0 0 \
\hline \text { Retained earnings } &575,000&495,000\
\hline \text { Less: Treasury stack } & \underline{(110,000)}& ---- \
\hline \text { Total sharehalders' equity } & \underline{\$ 1,696,000 } & \underline{\$1,366,000} \
\hline
\end{array}$$
Based on this information, how many shares of preferred stock were issued in 2017 and what was the average issue price?

Question

The shareholders' equity sections of Samuels Company as reported on the balance
Sheets for December 31 were:
$$\begin{array} { | l | r | r | } 
\hline &{ \mathbf { 2 0 1 7 } } &  { \mathbf { 2 0 16 } } \
\hline \text { Preferred stock (9\%, } \$ 50 \text { par value) } & \$ 200,000 & \$ 120,000 \
\hline \begin{array} { l } 
\text { Common stock (\$10 par value, } 750,000\text { shares} \
\text { autharized, } 54,000 \text { issued and } 5,000\text { held in} \
\text { treasury) }
\end{array} & 540,000 &3 9 6 , 0 0 0  \
\hline \text { Additianal paid-in capital: } & & \
\hline \text { Preferred stock } &155,000 &5 5 , 0 0 0 \
\hline \text { Camman stock } & 3 3 6 , 0 0 0 & 30 0 , 0 0 0    \
\hline \text { Retained earnings } &575,000&495,000\
\hline \text { Less: Treasury stack } & \underline{(110,000)}& ---- \
\hline \text { Total sharehalders' equity } &  \underline{\$ 1,696,000 } & \underline{\$1,366,000} \
\hline
\end{array}$$
Based on this information, how many shares of preferred stock were issued in 2017 and what was the average issue price?

Quizplus · Accepted Answer

The increase in preferred stock from 2016 to 2017 is $80,000 ($200,000 - $120,000). Since the par value is $50, this means 1,600 shares were issued ($80,000 / $50 = 1,600). The additional paid-in capital for preferred stock increased by $100,000 ($155,000 - $55,000) in 2017. The total amount paid for the new shares is $180,000 ($80,000 + $100,000), making the average issue price $112.50 per share ($180,000 / 1,600 shares).

The Shareholders' Equity Sections of Samuels Company as Reported on the Balance