Calculation of number of stock outstanding.
The information below relates to Question No. 2
The stockholders' equity section of the balance sheet of Garson Fashions, Inc., at December 31, 2008 appears as follows:
Stockholders' equity:
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7% preferred stock, $100 par, callable at $105. 50,000 shares authorized, 60,000 shares issued ...................
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$6,000,000
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Common stock, $2 par, 600,000 shares authorized, 400,000 shares issued, of which 30,000 are held in treasury ................................
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800,000
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Additional paid-in capital:
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From issuance of preferred stock................................
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680,000
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From issuance of common stock .........................................................................
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1,720,000
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From treasury stock transactions .....................................................................
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60,000
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From common stock dividends ...........................................................................
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400,000
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Total paid-in capital ..........................................................................
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$9,660,000
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Retained earnings ($240,000 equal to cost of treasury stock is not available for dividends) ............................................................
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2,400,000
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$12,060,000
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Less: Treasury stock (at cost 30,000 common shares) ........................................
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(240,000)
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Total stockholders' equity ......................................................................
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$11,820,000
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Answer the following question based on the stockholder's equity section given above. The company purchased no treasury stock before 2008. Please show your work to receive partial credit in the event that your final answer is incorrect.
a. How many shares of common stock are outstanding?
b. What was the average issue price per share of preferred stock?