Question

Problem 14-04A (Video)

On January 1,2020, Ivanhoe Inc. had the following stockholders' equity balances.

Common Stock (425,000 shares issued) $ 850,000

Paid-in Capital in Excess of Par-Common Stock 580,000

Common Stock Dividends Distributable 130,000

Retained Earnings 660,000

During 2020, the following transactions and events occurred.

1. Issued 65,000 shares of $ 2 par value common stock as a result of 15 % stock dividend declared on December 15,2021 .

2. Issued 32,500 shares of common stock for cash at $ 4 per share.

3. Purchased 31,000 shares of common stock for the treasury at $ 5 per share.

4. Declared and paid a cash dividend of $ 113,000.

5. Sold 6,000 shares of treasury stock for cash at $ 5 per share.

6. Earned net income of $ 365,000.

Answer 1

• Requirement

Stockholder's equity Statement
at 31 Dec 2020
	Common Stock	PIC in excess of Par Common Stock	Common Stock Dividend distributable	Treasury stock	Retained earnings	TOTAL
Balance Jan 1	$850,000	$580,000	$130,000		$660,000	$2,220,000
Issued 65000 shares	$130,000		($130,000)			$0
Issued 32500 shares	$65,000	$65,000				$130,000
Purchased 31000 shares				($155,000)		($155,000)
Declared Cash dividend					($113,000)	($113,000)
Sold 6000 shares				$30,000		$30,000
Net Income					$365,000	$365,000
Balance Dec 31	$1,045,000	$645,000	$0	($125,000)	$912,000	$2,477,000

• Working

	Common Stock	PIC in excess of Par Common Stock	Common Stock Dividend distributable	Treasury stock	Retained earnings
Balance Jan 1	850000	580000	130000		660000
Issued 65000 shares	=65000*2		-130000
Issued 32500 shares	=32500*2	=32500*(4-2)
Purchased 31000 shares				=-31000*5
Declared Cash dividend					-113000
Sold 6000 shares				=6000*5
Net Income					365000