Question

On January 1, 2022, Larkspur, Inc. had these stockholders’equity balances. Common Stock, $1 par (2,200,000 shares authorized, 675,000 shares issued and outstanding) Paid-in Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income $675,000 1,440,000 703,000 47,000 During 2022, the following transactions and events occurred. 1. Issued 47,500 shares of $1 par value common stock for $4 per share. 2. Issued 57,000 shares of common stock for cash at $6 per share. 3. Purchased 22,100 shares of common stock for the treasury at $3.40 per share. 4. Declared and paid a cash dividend of $113,000. 5. Earned net income of $407,000. 6. Had other comprehensive income of $17,400. Prepare the stockholders' equity section of the balance sheet at December 31, 2022.

Answer 1

1. Issued 47,500 shares of $1 par value common stock for $4 per share.

Dr Cash 190,000 (47,500 shares of $4)

Cr Common stock 47,500 (47,500 shares of $1 par)

Cr Paid-in Capital in Excess of Par Value 237,500

2. Issued 57,000 shares of common stock for cash at $6 per share.

Dr Cash 342,000 (57,000 shares x $6)

Cr Common stock 57,000 (57,000 shares x $1 par)

Cr Paid-in Capital in Excess of Par Value 285,000

3. Purchased 22,100 shares of common stock for the treasury at $3.40 per share.

Dr Treasury stock 75,140 (22,100 shares x $3.40)

Cr Cash 75,140

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

Dr Retained earnings $113,000

Cr Cash $113,000

5. Earned net income of $407,000.

Dr Income summary $407,000

Cr Retained earnings $407,000

Stockholders’ Equity section of the balance sheet at December 31, 2022
Shareholders Equity
Capital stock
Common Stock, $1 par value, (2,200,000 shares authorized; 675000 shares issued and outstanding)	779500
Additional paid-in capital
Paid-in capital in excess of par value	1962500
Total paid-in capital	2742000
Retained earnings	997000
less Treasury stock (14,900 common shares)	75140
Add: Accumulated other comprehensive Income	17400
Total Stockholders’ Equity	3681260

Common stock existing : 675000+47500+57000	779500
Paid in excess of par value : 1440000+237500+285000	1962500
Retained earnings : 703000+407000-113000	997000
Treasury stock : 22100*0.34	75140