In Draco Corporation's first year of business, the following transactions affected its equity accounts. Issued 4,000...

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In Draco Corporations first year of business, the following transactions affected its equity accounts. Issued 4,000 shares o

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Answer 1

Answer #1

DRACO CORPORATION

Stockholders Equity Section of Balance Sheet

December 31

Particulars	Amount
Common Stock - $ 2 Par Value	8,000
Paid in Capital in excess of par value - Common Stock	64,000
Preferred Stock - $ 10 Par Value	10,000
Paid in Capital in excess of par value - Preferred Stock	13,000
Retained Earnings	35,000
Treasury Stock	-6,000
Total Stockholders Equity	124,000

Notes

Treasury Stock = 200 Shares * $ 30 per Share = $ 6,000

Retained Earnings = Net Income - Dividends

Retained Earnings = 50,000 - 15,000 = $ 35,000

Par Value of Common Stock = 4,000 Shares * $ 2 per Share = $ 8,000

Paid in Capital in Excess of Par - Common Stock = 4,000 Shares * $ 16 per Share = $ 64,000

Excess Value per Share = 18 - 2 = $ 16

Par Value of Preferred Stock = 1,000 Shares * $ 10 per Share = $ 10,000

Paid in Capital in excess of par value - Preferred Stock = 1,000 Shares * $ 13 per Share = $ 13,000

Excess Value per Share of Preferred Stock = 23 - 10 = $ 13

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