Question

Financial Statement Presentation and Stock Transactions........ Homework worth 20 points must be turned in at start of class Transaction Balance Sheet Equity Section After Each Transaction Issued 50,000 shares of common stock with par of $10 when market price is $45.00. Issued 20,000 of cumulative 5% preferred stock with par of $5 for market price of $10. This is the first issuance of stock by the company All preferred stock is non- participating and is handled as we have handled preferred stock in the exercises in class. 6 points Contributed Capital: Common stock, shares issued and shares outstanding, $_par Paid in capital, Common stock (Insert cumulative or noncumulative, participating or non-participating) Preferred stock, shares issued and shares outstanding. $ par Paid in capital, Preferred stock Total Contributed Capital Retained Earnings Dividends Distributable Accumulated Comprehensive Income Less: Treasury Stock Total Equity

Answer 1

Contributed Capital:

Common stock, 50,000 shares issued, 50,000 shares fully subscribed and 0 shares outstanding, $.10 par

Paid in Capital = 50,000 shares x $.10 = $.500,000 (A)

Share Premium = 50,000 shares x ($.45-$.10) = $.1,750,000 (B)

Preferred stock, 20,000 shares issued, 20,000 shares fully subscribed and 0 shares outstanding, $.5 par

Paid in Capital = 20,000 shares x $.5 = $.100,000 (C)

Share Premium = 20,000 shares x ($.10-$.5) = $.100,000 (D)

Total Equity = (A) + (B) + (C) = (D) = $.2,450,000