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 65,000 additional shares of $1 par value common stock for $62 per share. May 10 Purchases 6,000 shares of treasury stock for $65 per share. June 1 Declares a cash dividend of $2.00 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 3,000 shares of treasury stock purchased on May 10 for $70 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, $5,500,000; and Retained Earnings, $3,000,000. Net income for the year ended December 31, 2021, is $700,000. 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
(Stockholders'Equity Section)
December 31, 2021
Stockholders' Equity:
Common stock	$165000
Additional paid-in-capital	9480000
Total paid-in-capital	9645000
Retained earnings	3382000
Treasury stock	-195000
Total Stockholders' Equity	$12832000

Shares issue on March 1= 65000*$1= $65000

Common stock= Beginning balance+Shares issue on March 1

= $100000+65000= $165000

Additional capital on common stock on March 1= ($62-1)*65000= $3965000

Additional capital on treasury stock= 3000*$70-3000*$65= $15000

Additional paid-in-capital= Beginning balance+Additional capital on common stock on March 1+Additional capital on treasury stock

= $5500000+3965000+15000= $9480000

Outstanding shares for Cash dividend= 100000+65000-6000= 159000 shares

Cash dividend= 159000*$2= $318000

Retained earnings= Beginning balance+Net income-Cash dividend

= $3000000+700000-318000= $3382000

Treasury stock= 6000*$65-3000*$65= $195000