Question

Kinkald Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders' equity during its first year of operations. General Journal Debit Credit 280,000 Common Stock: 925 Par Value Paid-In Capital in Excess of Par Value, Common Stock 250.000 30,000 190,000 Organization Expenses Common stock,525 Par Value Paid-In Capital in Excess of Par Value. Common Stock 126.000 64,000 Cash Recounts Receivable building Notes Payable Common stock, 525 Par Value Paid-in Capital in Excess of Par Value, Common Stock 46,000 17,500 82,900 30.000 Common Stock, $25 Par Value Paid-in Capital in Excess of Par Value, Common Stock 78,000 63.000 Required: 2. How many shares of common stock are outstanding at year-end? 3. What is the amount of minimum legal capital (based on par value) at year-end? 4. What is the total paid in capital at year-end? 5. What is the book value per share of the common stock at year-end if total paid in capital plus retained earnings equals $799,000? Complete this question by entering your answers in the tabs below. Reg 2 to 4 Reas How many shares of common stock are outstanding at year-end? What is the amount of minimum legal capital (based on par value) at year-end? What is the total paid-in capital at year-end?

Answer 1

Solution:

2. Calculation number of shares of common stock outstanding at the year end

                No. of shares of common stock = total amount of Common stock / par value of each share

                                                              = $ (250,000 + 126,000 + 56,400 + 78,000) / $ 25

                                                              = $ 510,400 / $25

                                                              = 20,416 Shares

3. Calculation of amount of minimum legal capital

             Minimum legal capital                 = No. of shares of common stock * par value

                                                              = 20,416 shares * $25

                                                              = $ 510,400

4. Computation of total paid in capital

          Total paid in capital                  = $ (30,000 + 64,000 + 30,000 + 63,000)

                                                        = $ 187,000

5. Calculation of book value per share

            Book Value per share                   = Shareholders’ Equity / No. of Shares Outstanding

                                                              = $ (510,400 + 799,000) / 20,416

                                                              = $ 64.14 per share (Approx)