Question

4 The Stockholders' Equity section of the balance sheets for Klee Corporation on December 31, 2018, and December 31, 2019, along with other selected account balances on the two dates is provided below. Certain information is missing from the statements.) In 2019, the following transactions affecting equity occurred: 10 points 0. Additional shares of common stock were issued in April. No other common stock was issued during the year. b. A cash dividend of $1 per share was declared and paid on common stock in December c. The Treasury Stock-Preferred was purchased at par in January, d. Additional preferred stock was issued for cash in July e. The yearly cash dividend of $1 per share was declared and paid on preferred stock outstanding as of December 3, 2019. $ 80,00 $ 60,000 Stockholders' Equity Paid-in Capital Preferred Stock (5 percent, $20 par, authorized 20,000 shares) Issued Paid-in Capital in Excess of Par Value- Preferred Common Stock ($10 par value, 200,000 shares authorized) Issued Paid-in Capital in excess of Par Value Common Total Paid-in Capital Retained earnings Appropriated for Plant Expansion Appropriated for Treasury Stock Unappropriated Total Retained Earnings 750,00 500,000 10.000 800,300 $ 560, $ 100,000 100,000 40,00 640, ege 600.000 $ 700.000 $1,260,000 Less Treasury Stock-Preferred Total Stockholders' Equity $1,620, 500 10.000 $1,619,500 $1,260,000

Answer 1

Solution:

1. Calculation of No. of Shares of Preferred stock outstanding at year end

Particulars	No. of Shares
Outstanding Preferred Stock at the beginning ($ 60,000 / $ 20) Less: Treasury stock (Preferred) Add: Additional Issue of Shares ($ 20,000 / $ 20)	3,000 (500) 1,000
Outstanding Preferred Stock at the end	3,500

2. Calculation of No. of Shares of Common stock outstanding at year end

Particulars	No. of Shares
Outstanding Common Stock at the beginning ($ 500,000 / $ 10) Add: Additional Issue of Shares ($ 250,000 / $ 10)	50,000 25,000
Outstanding Common Stock at the end	75,000

3. Calculation of shares of preferred stock purchased as treasury stock

This is clearly stated that Treasury stock – preferred was purchased at par i.e. $ 20 per share.

The cost of treasury stock – preferred given at the end 2019 for $ 10,000.

This means, shares of treasury stock purchased = $ 10,000 / $ 20 = 500 shares

4. Calculation of shares of preferred stock issued for cash

Shares of preferred stock Issued as at 2019 ($80,000 / $ 20) Shares of preferred stock Issued as at 2018 ($60,000 / $ 20)	4,000 3,000
Shares of preferred stock issued for cash during the year	1,000

Note: Treasury stock – Preferred does not affect the Issued shares of Preferred stock. It only deducted from the Outstanding shares of Preferred stock.

5. Calculation of sales price per share of Preferred stock Issued

Par value of Preferred stock Issued (1,000 shares * $ 20) Add: Paid-in-Capital in Excess of par value – Preferred	$ 20,000 $ 500
Total Sales Price of Preferred stock Issued (÷) No. of Preferred Stock Shares Issued	$ 20,500 1,000
Sales Price per share of Preferred stock Issued	$ 20.50