Question

Problem 14-04A (Video)

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

Common Stock (480,000 shares issued)	$960,000
Paid-in Capital in Excess of Par-Common Stock	560,000
Common Stock Dividends Distributable	140,000
Retained Earnings	520,000

During 2020, the following transactions and events occurred.

1.		Issued 70,000 shares of $2 par value common stock as a result of 15% stock dividend declared on December 15, 2021.
2.		Issued 35,000 shares of common stock for cash at $4 per share.
3.		Purchased 21,000 shares of common stock for the treasury at $5 per share.
4.		Declared and paid a cash dividend of $111,000.
5.		Sold 8,000 shares of treasury stock for cash at $5 per share.
6.		Earned net income of $370,000.

Prepare a stockholders' equity statement for the year. (If an amount reduces the account balance then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Pharoah Inc. Stockholders' Equity Statement December 31, 2020For the Month Ending December 31, 2020For the Year Ending December 31, 2020
	Common Stock		Paid-in Capital in Excess of Par - Common Stock		Common Stock Dividends Distributable		Treasury Stock		Retained Earnings		Total
Balances, Jan. 1	$		$		$		$		$		$
Issued 70,000 share for stock dividend
Issued 35,000 shares for cash
Purchased 21,000 shares of treasury stock
Declared cash dividend
Sold 8,000 shares of treasury stock
Net income for year
Balances, Dec. 31	$		$		$		$		$		$

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Answers

Stockholders' Equity Statement
For the year ending 31 Dec 2020
	Common Stock	Excess of Par Common Stock	Stock Dividen distributable	Treasury Stock	Retained earnings	Total
Balances, Jan. 1	$960,000	$560,000	$140,000		$520,000	$2,180,000
Issued 70,000 share for stock dividend	$140,000		($140,000)			$0
Issued 35,000 shares for cash	$70,000	$70,000				$140,000
Purchased 21,000 shares of treasury stock				$105,000		$105,000
Declared cash dividend					($111,000)	($111,000)
Sold 8,000 shares of treasury stock				($40,000)		($40,000)
Net income for year					$370,000	$370,000
Balances, Dec. 31	$1,170,000	$630,000	$0	$65,000	$779,000	$2,644,000

--Working

	Common Stock	Excess of Par Common Stock	Stock Dividen distributable	Treasury Stock	Retained earnings
Balances, Jan. 1	=480000*2	560000	140000		520000
Issued 70,000 share for stock dividend	=70000*2		-140000
Issued 35,000 shares for cash	=35000*2	=35000*2
Purchased 21,000 shares of treasury stock				=21000*5
Declared cash dividend					-111000
Sold 8,000 shares of treasury stock				=-8000*5
Net income for year					370000