Question

5. Stockholders’ Equity (9pts): 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 (0.5pts): 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 (0.5pts): Calculate the number of shares of Common Stock that would be outstanding as of December 31, 2018. Show all calculations.

PART C (4pts): 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 (4pts): Taking into account all of the information and all of the transactions above, prepare:

1. 3pts - The Statement of Stockholders’ Equity for Planet Express for the period ended December 31, 2018. Assume net income for 2018 was $81,930.
2. 1pt - The equity section of the Balance Sheet for Planet Express as of December 31, 2018.

Answer 1

PART A Number of shares outstanding on 13th May 2018 Number of shares outstanding on 31 december 2017 Number of shares issued on 2nd February 2018 Number of shares outstanding on 13th May 2018 80000 9000 89000 PART B Number of shares outstanding on 31 December 2018 Number of shares outstanding on 31 December 2017 Number of shares issued on 2nd February 2018 Number of shares issued on 16 November 2018 Total Issued Shares Less Trasury Stock Number of shares outstanding on 31 December 2018 80000 9000 5600 94600 -3400 91200

PARTC Date Debit Credit 144,000 9000*16 9000*.25 9000*15.75 2/28 2,250 141,750 89000*.15 13,350 4/19 13,350 13,350 Account Title and explanation Cash Common stock Additional Paid in capital (Issue of 9000 common stock of 25 at 16 each) Common stock Dividend Dividend Payable (Declaration of dividend at .15 on 89000 stocks) Dividend payable Cash (Payment of Dividend) Tresuary Stock Cash (Repurchase of 3400 of its own stock at 17 per stock) Cash Common stock Additional Paid in capital (Issue of 5600 common stock of 25 at 19 each) 6/10 13,350 3400*17 57,800 6/30 57800 106,400 5600*19 5600*.25 5600*18.75 11/16 1,400 105,000

PART D Statement of Stock holders equity Stockholders Equity Common stock issued 94600 at.25(of which 3400 treasuary stock) Additional paid-in capital - Common Less Treasuary 2365000 0 -57800 2,307,200 Retained earnings Add Net Income Less Dividends Stockholders Equity 127,032 81,930 -13,350 195,612 2,502,812

Equity section of Balance Sheet Owners Equity Common stock issued 94600 at.25(of which 3400 treasuary stock) Additional paid-in capital - Common Less Treasuary 2365000 1290255 -57800 3,597,455 127,032 81,930 -13,350 195,612 Retained earnings Add Net Income Less Dividends Owners Equity 3,793,067 1043505 Additional paid in capital on 31 December 2018 on 31 December 2017 On 2 February Issue On 16 November Issue Total 141750 105000 1290255

Note. It is assumed the stock repurchase are not included in the issue on 16 November.

64600 If Treasuary Stock are included in issue in November Cash Treasuary Stock Additional paid in capital 3400*19 3400*17 3400*2 57800 6800 And Balace will be the usual issue 34,200 Cash Common stock Additional Paid in capital 1800*19 1800*.25 450 1800 18.75 33,750

Accordingly some minor change may be there.