Question

Stockholders' Equity Section of Balance Sheet The following Stockholders' Equity section of the balance sheet prepared as of the end of the current year contains errors. Stockholders' Equity Paid-in capital: Preferred 2% stock, $80 par (125,000 shares authorized and issued) Excess of issue price over par Paid-in capital, preferred stock Retained earnings Treasury stock (75,000 shares at cost) Dividends payable 10,000,000 500,000 $10,500,000 96,700,000 1,755,000 430,000 $109,385,000 17,655,000 300,000 Total paid-in capital Common stock, $20 par (1,000,000 shares authorized, 825,000 shares issued) Organizing costs Total stockholders' equity Prepare a corrected Stockholders' Equity section 127,340,000

Answer 1

Stockholders' Equity

Paid in capital :
Common stock	16,500,000
Excess of issue over par	1,155,000
Paid in capital, common stock		17,655,000
Preferred stock	10,000,000
Excess of issue price over par	500,000
Paid in capital, preferred stock		10,500,000
Total paid in capital		28,155,000
Retained earning		96,700,000
Total		124,855,000
Treasury stock		-1,755,000
Total stockholder's equity		$123,100,000

Common stock, par value = Number of shares issued x Par value per share

= 825,000 x 20

= $16,500,000

Excess of issue price over par, common = Issue price - Par value

= 17,655,000 - 16,500,000

= $1,155,000

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