High Chaparral Company's capital stock is currently trading for $22 per share. The High Chaparral Company has the following accounts included within the owners' equity section of the balance sheet: $\begin{array} { l }
\text { Capital stock, $ \$ 5.00 $ par value, 10,000 shares issued }& \$50,000\
\text {Capital in excess of par value }&110,000 \
\end{array}$
Assuming that the only transaction affecting these accounts was the issue of the company's capital stock, the High Chaparral Company originally sold its capital stock for:
A) $16.00 per share
B) $5.00 per share
C) $22.00 per share
D) $11.00 per share

Question

High Chaparral Company's capital stock is currently trading for $22 per share. The High Chaparral Company has the following accounts included within the owners' equity section of the balance sheet: $\begin{array} { l  }
 \text { Capital stock, $ \$ 5.00 $ par value, 10,000 shares issued }& \$50,000\
 \text {Capital in excess of par value  }&110,000 \
\end{array}$
 Assuming that the only transaction affecting these accounts was the issue of the company's capital stock, the High Chaparral Company originally sold its capital stock for:
A) $16.00 per share
B) $5.00 per share
C) $22.00 per share
D) $11.00 per share

Quizplus · Accepted Answer

The total amount received from issuing the stock is the sum of the capital stock and capital in excess of par value, which is $50,000 + $110,000 = $160,000. Dividing this by the 10,000 shares issued gives $16.00 per share.

High Chaparral Company's Capital Stock Is Currently Trading for $22