Question

Reporting Paid-In Capital The following accounts and their balances were selected from the adjusted trial balance of Point Loma Group Inc., a freight forwarder, at October 31, the end of the current fiscal year: Common Stock, no par, 514 stated value $420,000 Paid-In Capital from Sale of Treasury Stock 248,800 Paid-In Capital in Excess of Par-Preferred Stock 69,120 Paid-In Capital in Excess of Stated Value-Common Stock 1,008,000 Preferred 2% Stock, $120 par 576,000 Retained Earnings 3,065,000 Prepare the Paid In Capital portion of the Stockholders' Equity section of the balance sheet using Method 1 of Exhibit 8. There are 100,000 shares of common stock authorized and 13,000 shares of preferred stock authorized. Point Loma Group Inc., Stockholders' Equity October 31, 20XX Paid-in Capital Total Paid in Capital

Answer 1

Common and preferred stock includes ownership interest in a firm. Common stock includes voting interest in a firm. Preferred stock operate as a non-voting ownership interest in a firm. As compensation for the non-voting ownership interest, preferred shareholders takes preference in dividends and in liquidation. The selling price over and above par value is posted in paid in capital. Retained earnings represents profits retained in a business since inception. Retained earnings is increased by profits and decreased by losses and withdrawals.

576,000 69,120 $ 645120 Point Loma Group Inc. Statement of Stockholder's Equity as of October al. Preferred 24 stock, $ 120 par, 13 000 shares authorisedy 4800 shores outstanding, Paid-In Capital in excess of par- Preferred stock Totál laid-In - Capital - Prefened Stocke - Common stock, no paur, $14 stated value Loogon shares authorised, 30000 czetstanding aid in Capital in excess of stated value- -commes Stock Total Paid- In Capital - Common Stock hard - In Capital from sale of Treasury Stock total paid in capital Retained Earnings Total Equity 420,000 1,008,000 $ 1428,000 248,800 $2321920 3065.000 $5386,920