Question

1. Scranton Company has the following stockholder equity items at December 31, 2018:

Common Stock 1,000,000 shares authorized, 400,000 shares issued, $2 par
Preferred Stock, 200,000 shares authorized, 100,000 shares issued, $10 par
Common Stock Dividend Distributable, $250,000
Cash Dividend Distributable, $300,000
Additional Paid in Capital-common stock, $2,000,000
Additional Paid in Capital-preferred stock, $1,000,000
Retained Earnings, $5,000,000
Treasury Stock, 40,000 shares, at cost, $300,000

Prepare in good format the stockholder equity section of the balance sheet.

Answer 1

Solution:

Scranton Company
Balance Sheet
[Stockholders` Equity Section]
For the Year Ended 31st December, 2018
Stockholder's equity :
Preferred Stock, 200,000 shares authorized, 100,000 shares issued, $10 par	$             1,000,000
Common Stock 1,000,000 shares authorized, 400,000 shares issued, $2 par	$                800,000
Common Stock Dividend Distributable	$                250,000
Additional Paid in Capital-preferred stock	$             1,000,000
Additional Paid in Capital-common stock	$             2,000,000
Total paid in capital	$             5,050,000
Retained Earnings [5000000-300000]	$             4,700,000
Subtotal	$             9,750,000
Less: Treasury Stock	$              (300,000)
Total stockholder's Equity	$             9,450,000