Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.  

March 1 Issues 65,000 additional shares of $1 par value common stock for $62 per share.
May 10 Repurchases 6,000 shares of treasury stock for $65 per share.
June 1 Declares a cash dividend of $2.00 per share to all stockholders of record on June 15. (Hint:  Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Reissues 3,000 shares of treasury stock purchased on May 10 for $70 per share.

Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $5,500,000; and Retained Earnings, $3,000,000. Net income for the year ended December 31, 2018, is $700,000.  

Required:

Prepare the statement of stockholders' equity for Power Drive Corporation for the year ended December 31, 2018.

	POWER DRIVE CORPORATION Statement of Stockholders' Equity For the Year Ended December 31, 2018 Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity Balance, January 1 $100,000 $5,500,000 $3,000,000 $0 $8,600,000 Issued common stock Purchase treasury stock Dividends Sale of treasury stock Net income Balance, December 31

Answer 1

Solution:

Power drive Corporation
Statement of Stockholder's Equity
For the year ended December 31, 2018
Particulars	Common Stock	Additional Paid in Capital	Retained Earnings	Treasury Stock	Total Stockholder's Equity
Balance, January 1	$1,00,000	$55,00,000	$30,00,000	$0	$86,00,000
Issue of common stock	$65,000	$39,65,000			$40,30,000
Purchase of Treasury Stock				-$3,90,000	-$3,90,000
Dividends [(100000+65000-6000)*$2]			-$3,18,000		-$3,18,000
Sale of Treasury stock		$15,000		$1,95,000	$2,10,000
Net Income			$7,00,000		$7,00,000
Balance, December 31	$1,65,000	$94,80,000	$33,82,000	-$1,95,000	$1,28,32,000