Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021. March 1 Issues 63,000 additional shares of $1 par value common stock for $60 per share. May 10 Purchases 5,800 shares of treasury stock for $63 per share. June 1 Declares a cash dividend of $1.90 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) July 1 Pays the cash dividend declared on June 1. October 21 Resells 2,900 shares of treasury stock purchased on May 10 for $68 per share. Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000: Additional Paid-in Capital, $5,300,000; and Retained Earnings, $2,800,000. Net income for the year ended December 31, 2021, is $680,000. Required: Prepare the stockholders' equity section of the balance sheet for Power Drive Corporation as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.) POWER DRIVE CORPORATION Balance Sheet (Stockholders' Equity Section) December 31, 2021 Stockholders' Equity: Total Paid-in Capital Total Stockholders' Equity

Answer 1

Power Drive Corporation
Balance sheet
(Stockholder's Equity Section)
At December 31, 2021
Stockholder's Equity:
Common stock	$               1,63,000
Additional Paid - in - Capital	$             90,31,500
Total Paid - in Capital	$             91,94,500
Retained earnings	$             31,81,320
Treasury Stock	$              -1,82,700
Total Stockholder's Equity	$         1,21,93,120
Workings:
Paid in capital in excess of par value, Common stock (63000 X $59)	$             37,17,000
Paid in capital in from sale of treasury stock [2900 X ($68-$63)]	$                   14,500
Additional Paid - in - Capital	$             37,31,500
Dividend declared [(163000 - 5800) X $1.90]	$               2,98,680
Treasury Stock [(5800-2900)*63]	$               1,82,700
	Beginning balance	Addition	Deduction	Ending balance
Common stock	$               1,00,000	$       63,000		$           1,63,000
Additional Paid - in - Capital	$             53,00,000	$ 37,31,500		$        90,31,500
Retained earnings	$             28,00,000	$   6,80,000	$ 2,98,680	$        31,81,320