Question

A firm has the balance sheet accounts, common stock, and paid-in capital in excess of par, with values of r40 000 and r500 000, respectively. The firm has 40 000 common shares outstanding. If the firm had a par value of r1, the stock originally sold for.

Answer 1

The Shares of the stock were sold for $13.50 each.

The initial share price of the stock was $13.50 Here are two values:

1) r40,000

2) r500,000

Divide the values 1 and 2 by the firm's par value of $1 to arrive at the final result.

For a total of 1$, 500000/40000=12.5$ was purchased.

The share was therefore sold for $13.50 .

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