Total stockholders' equity includes $50,000 of common stock with a stated value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. How many total shares are outstanding?

Question

Quizplus · Accepted Answer

To determine the total number of shares outstanding, we need to consider the common stock and the treasury stock.
First, let's calculate the number of shares represented by the common stock. If the common stock has a total value of $50,000 and a stated value of $0.50 per share, we can find the total number of shares issued by dividing the total value by the stated value per share:
Number of shares issued = Total value of common stock / Stated value per share
Number of shares issued = $50,000 / $0.50
Number of shares issued = 100,000 shares
Next, we need to account for the treasury stock. Treasury stock represents shares that were issued and then repurchased by the company. These shares are not considered outstanding because they are not held by external investors.
The problem states that there are 5,000 shares of treasury stock, which means these shares are not part of the outstanding shares.
To find the total number of shares outstanding, we subtract the number of treasury shares from the number of shares issued:
Total shares outstanding = Number of shares issued - Number of treasury shares
Total shares outstanding = 100,000 shares - 5,000 shares
Total shares outstanding = 95,000 shares
Therefore, the correct answer is:
a. 95,000

Total Stockholders' Equity Includes $50,000 of Common Stock with a Stated