Question

Stockholders’ Equity: Planet Express, Inc. reported the following information in the equity section of their balance sheet at December 31, 2017:

Stockholders’ Equity:
Common stock, $0.25 par (1,000,000 shares authorized; 80,000 shares issued and outstanding)	$20,000
Additional paid-in capital	$1,043,505
Retained earnings	$127,032
Total equity:	$1,190,537

During 2018, Planet Express completed these transactions that affected stockholders’ equity:

Date:	Transaction:
2/28	Issued 9,000 shares of Common Stock for $16 per share.
4/19	Declared a cash dividend of $0.15 per common share, payable to all stockholders of record on May 13th, 2018.
6/10	Paid the cash dividend.
6/30	Reacquired 3,400 shares of Common Stock as Treasury Stock, paying $17 per share.
11/16	Issued 5,600 shares of Common Stock for $19 per share.

PART A: Calculate the number of shares of Common Stock that would be outstanding as of the Date of Record, May 13^th, 2018. Show all calculations.

PART B: Calculate the number of shares of Common Stock that would be outstanding as of December 31, 2018. Show all calculations.

PART C: Record all the journal entries for Planet Express’s transactions listed above. Make sure to use proper formatting, include the date of each transaction, and a brief description of each.

PART D: Taking into account all of the information and all of the transactions above, prepare:

1. The Statement of Stockholders’ Equity for Planet Express for the period ended December 31, 2018. Assume net income for 2018 was $81,930.

2. The equity section of the Balance Sheet for Planet Express as of December 31, 2018.

Answer 1

Part A

Calculation of the number of shares of Common Stock that would be outstanding as of the Date of Record, May 13th, 2018.

	No of shares
Opening	80,000
Add - issued as on feb 28	9,000
Common stock as on May 13th	89,000

Part B

Calculation of the number of shares of Common Stock that would be outstanding as of the Date of Record, December 31, 2018.

	No of shares
Opening	80,000
Add - issued as on feb 28	9,000
Less Reacquired as on June 30	(3,400)
Add - issued as on Nov 16	5,600
Common stock as on May Dec 31	91,200

Part C

Date	Particulars		Amount
28-02-18	Cash	Debit	144,000	9000 * 16
	Common stock	Credit	2,250	9000 * 0.25
	Additional paid-in capital/ Securities premium	Credit	141,750	9000 * 15.75
	9000 shares issued at $16 per shares
19-04-18	Dividend	Debit	13,350	89000 * 0.15
	Dividend Payable	Credit	13,350	89000 * 0.15
	dividend payable to all stockholders of record on May 13th, 2018.
10-06-18	Dividend Payable	Debit	13,350	89000 * 0.15
	Cash	Credit	13,350	89000 * 0.15
	dividend paid to all stockholders of record on May 13th, 2018.
30-06-18	Common stock	Debit	850	3400 * 0.25
	Additional paid-in capital/ Securities premium	Debit	56,950	3400 * 16.75
	Common stock holders'	Credit	57,800	3400 * 17
	Reacquired 3,400 shares of Common Stock as Treasury Stock
30-06-18	Common stock holders'	Debit	57,800	3400 * 17
	Cash	Credit	57,800	3400 * 17
	paying $17 per share to sharesholders of 3400 shares
16-11-18	Cash	Debit	106,400	5600 * 19
	Common stock	Credit	1,400	5600 * 0.25
	Additional paid-in capital/ Securities premium	Credit	105,000	5600 * 18.75
	Issued 5,600 shares of Common Stock for $19 per share.

Part D

Planet Express
Statement of Stockholders' Equity
For the Year ended December 31, 2018
	Common stock	Retained Earnings	Additional paid-in capital	Total Shareholders' equity
Balance as at Jan 1 2018	$                 20,000	$                         127,032	$                     1,043,505	$                                1,190,537
Change in Common stock	$                   2,800		$                         189,800	$                                    192,600
Less Dividends		$                         (13,350)		$                                    (13,350)
Net Income		$                           81,930		$                                      81,930
Balance as at Dec 31 2018	$                 22,800	$                         195,612	$                     1,233,305	$                                1,451,717

2

Owners Equity
Common stock	$        22,800
Additional paid-in capital	$ 1,233,305
Retained Earnings	$     195,612
Total Owners Equity		$ 1,451,717
Total Liabilities and Owners Equity		1,451,717