The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: 
 
Contributed Capital
 
Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,000 shares are held as treasury stock)

$ 104,000

Additional Paid-In Capital, Preferred

14,300

Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,000 shares)

600,000

Retained Earnings

30,000

Treasury Stock, 1,000 Preferred shares at cost

(9,500)
 
Assume that no shares of treasury stock have been sold in the past.
 
**Required:**

Complete the following statements.

To complete the statements regarding Chemfast Corporation's stockholders' equity, we'll need to determine the missing figures based on the information provided. 

### **1. Number of Issued Preferred Shares**

The value of the Preferred Stock account is $104,000. Given that the par value of each preferred share is $20, we can calculate the number of issued shares as follows:

\[
\text{Number of issued preferred shares} = \frac{\text{Total Preferred Stock Value}}{\text{Par Value per Share}} = \frac{104,000}{20} = 5,200 \text{ shares}
\]

### **2. Number of Outstanding Preferred Shares**

Outstanding shares are those that have been issued but are not held as treasury stock. Since 1,000 shares are held as treasury stock:

\[
\text{Number of outstanding preferred shares} = \text{Issued Shares} - \text{Treasury Shares} = 5,200 - 1,000 = 4,200 \text{ shares}
\]

### **3. Average Issue Price of Preferred Stock**

The average issue price per preferred share can be determined by combining the Preferred Stock value and the Additional Paid-In Capital (Preferred) value, and then dividing by the number of issued shares:

\[
\text{Total value received from issued preferred shares} = 104,000 + 14,300 = 118,300
\]

\[
\text{Average issue price per preferred share} = \frac{118,300}{5,200} = \approx 22.75 \text{ per share}
\]

### **4. Total Stockholders’ Equity**

We can calculate the total stockholders' equity by summing all the equity components, considering that treasury stock is a reduction in equity:

\[
\text{Total Stockholders' Equity} = \text{Preferred Stock} + \text{APIC (Preferred)} + \text{Common Stock} + \text{Retained Earnings} - \text{Treasury Stock}
\]

\[
\text{Total Stockholders' Equity} = 104,000 + 14,300 + 600,000 + 30,000 - 9,500 = 738,800
\]

### Summary

Here are the completed statements based on the information:

1. **Number of issued preferred shares:** 5,200 shares.
2. **Number of outstanding preferred shares:** 4,200 shares.
3. **Average issue price of preferred stock:** $22.75 per share.
4. **Total stockholders' equity:** $738,800.

Do you want more details or have any questions?

Here are some related questions:
1. How does the treasury stock affect the overall stockholders’ equity?
2. What are the implications of holding treasury stock on financial statements?
3. How would selling treasury stock at a price above its cost affect stockholders' equity?
4. Can you explain the difference between issued shares and outstanding shares?
5. Why is additional paid-in capital important for preferred stock?
6. What happens if the company reissues treasury stock at a price below its original cost?
7. How would a stock split affect the stockholders' equity section?
8. What is the significance of retained earnings in determining a company's financial health?

**Tip:** Treasury stock reduces total stockholders' equity because it represents the company's repurchase of its own shares, which are no longer outstanding.

Explore how to calculate Chemfast Corporation's stockholders' equity with detailed steps and formulas. Learn about preferred stock valuation, issued and outstanding shares, and the impact of treasury stock on equity. Suitable for accounting professionals and students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation