Pugh Co. reported the following in its statement of stockholders' equity on January 1, 20X4:
Common Stock, $5 par value, authorized 200,000 shares, issued 100,000 shares $ 500,000
Additional paid‐in capital 1,500,000
Retained earnings 516,000
2,516,000
Less treasury stock, at cost, 5,000 shares 40,000
Total stockholders' equity $2,476,000
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The following events occurred in 20X4:
May 1 − 1,000 shares of treasury stock were sold for $10,000.
July 9 − 10,000 shares of previously unissued common stock were sold for $12 per share.
October 1 ‐ The distribution of a 2‐for‐1 stock split resulted in the common stock's per share par value being halved.
Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh's incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared.
In Pugh's December 31, 20X4 statement of stockholders' equity, the par value of the issued common stock should be
A. $550,000
B. $518,000
C. $291,000
D. $275,000

Treasury stock transactions do not affect shares issued, because treasury shares are included in issued shares. The only event during the year affecting the total par value of common stock issued is the July 9 issuance of shares that were not issued before.

The stock split does not change total par of shares issued, because par is cut in half and the number of shares is doubled. Treasury shares are protected, meaning they are also doubled and have their par cut in half. The total par of issued common stock at year-end is $550,000:

$500,000 from January 1

Plus $50,000 from July 9 issuance: 10,000 × $5

Equals $550,000 total par of issued shares.

Source: https://www.brainscape.com/flashcards/dividends-7208677/packs/11475096