Question

The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2020. In 2020, 15,000 shares were authorized and 7,000 shares of common stock ($50 par value) were issued at a price of $57. In 2021, 1,000 shares were issued as a stock dividend when the stock was selling for $60.300 shares of common stock were bought in 2022 at a cost of $64 per share. These 300 shares are still in the company treasury. In 2021, 10,000 preferred shares were authorized and the company issued 5,000 of them ($100 par value) at $113. Some of the preferred stock was reacquired by the company and later reissued for $4,700 more than it cost the company. The corporation has earned a total of $610,000 in net income after income taxes and paid out a total of $312,600 in cash dividends since incorporation. Prepare the stockholders' equity section of the balance sheet in proper form for Vicario Corporation as of December 31, 2022. Account for treasury stock using the cost method. (Enter account name only. Do not provide descriptive information.)
Please explain!

Answer 1

VICARIO CORPORATION

Stockholders equity

Capital Stock:
Preferred stock: $100 par value, 10,000 shares authorised, 5,000 shares issued and outstanding		$500,000
Common stock: $50 par value, 15,000 shares authorised, 7,000 shares issued		$350,000
Total capital stock		$850,000
Additional paid-in-capital:
In excess of par- prefered (5,000 shares × $13 above par)	$65,000
In excess of par - common stock	$59,000
From treasury stock - Preferred	$4,700
		$128,700
Total paid in capital		$978,700
Retained earnings($610,000-$312,600)		$297,400
Total paid-in-capital and retained earnings		$1,276,100
Less: Cost of treasury stock( 300 shares - Common @$64)		($19,200)
Total stockholders equity		$1,256,900

Orginal issue= 7,000 shares ×$7 above par =$49,000

Divided issue= 1,000 share ×$10 above par =$10,000

=$59,000

____×____

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