Question

The balance sheet of Castle Corporation includes the following stockholders’ equity section:
Common stock, $2 par, 80,000 shares authorized,
60,000 shares issued and outstanding ........... $120,000
Additional paid-in capital—common stock ......... 371,800
Total capital stock .................. $491,800
Retained earnings ................... 173,000
Total equity ...................... $664,800

Required:
1. Assume that Castle issued 60,000 shares for cash at the inception of the corporation and that no new shares have been issued since. Determine how much cash was received for the shares issued at inception.
2. Assume that Castle issued 30,000 shares for cash at the inception of the corporation and subsequently declared a 2-for-1 stock split. Determine how much cash was received for the shares issued at inception.
3. Assume that Castle issued 57,000 shares for cash at the inception of the corporation and that the remaining 3,000 shares were issued as the result of stock dividends when the stock was selling for $53 per share. Determine how much cash was received for the shares issued at inception.


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  • CreatedSeptember 22, 2015
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