A firm has $3,500,000 in its common stock account and $2,500,000 in its retained earnings account.The firm issued 100,000 shares of common stock.What was the original issue price if only one stock issue has ever been sold?

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Quizplus · Accepted Answer

The common stock account represents the amount of money received by the company from selling its shares of stock, and the retained earnings account represents the accumulated profits of the company that have not been distributed to shareholders as dividends. Since only one stock issue has ever been sold, we know that the $3,500,000 in the common stock account represents the proceeds from the sale of 100,000 shares of stock. Therefore, the original issue price per share was $3,500,000 ÷ 100,000 = $35 per share.

A Firm Has $3,500,000 in Its Common Stock Account and $2,500,000