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

Question

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

Quizplus · Accepted Answer

The number of shares issued in 2017 can be calculated by comparing the common stock values for 2017 and 2016. The common stock increased from $396,000 to $540,000, indicating an increase of $144,000. Since the par value of common stock is $10, this means 14,400 shares were issued ($144,000 / $10 = 14,400 shares). However, the question asks for the total number of shares issued in 2017, not the increase, so the correct calculation should consider the total issued shares in 2017 which is 54,000 shares. The error in calculation led to the incorrect conclusion. The correct approach to find the average issue price involves considering the total additional paid-in capital and common stock values.

The Shareholders' Equity Section of Samuels Company Were Reported on the Balance