Answered

Of the 125,000 shares of common stock issued by Vey Corp., 25,000 shares were held as treasury stock at December 31, 20X4. During 20X5, transactions involving Vey's common stock were as follows:January 1 through October 31 − 13,000 treasury shares were distributed to officers as part of a stock compensation plan. November 1- A 3 for-1 stock split took effect. December 1 - Vey purchased 5,000 of its own shares to discourage an unfriendly takeover. These shares were not retired. At December 31, 20X5, how many shares of Vey's common stock were issued and outstanding?a. 375,000 334,000.b. 375,000 324,000.c. 334,000 334,000.d. 324,000 324,000.

Answer :

Answer:

Option A: (375,000, 334,000)

Explanation:

The split is applied to the total stock shares and is not affected by the shares issued. Hence after the split total common stock shares will be as follows:

Common Stock Shares = 125,000 * 3 = 375,000

For outstanding shares, first of all subtracting the 25,000 shares that were held in treasury on December 31 – 20X4.

125,000 – 25,000 = 100,000

After that, 13,000 shares were issued to officers between  January 1 through October 31 – 20X5. We add this to the 100,000.

100,000 + 13,000 = 113,000

On November 1 – 20X5, 3-to-1 split took place after this. Thus, outstanding shares will be

113,000 * 3 = 339,000

On December 1 – 20X5, 5000 shares were purchased. Thus, we subtract this from 339,000.

339,000 – 5,000 = 334,000

As no further transactions took place after December 1 – 20X5,

Outstanding Shares = 334,000.

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