Question

The following information pertains to JAE Corp. at January 1, 2018:

Common stock, $8 par, 10,000 shares authorized, 2,000 shares issued and outstanding	$	16,000
Paid-in capital in excess of par, common stock		13,200
Retained earnings		60,800

JAE Corp. completed the following transactions during 2018:

1. Issued 850 shares of $8 par common stock for $27 per share.
2. Repurchased 250 shares of its own common stock for $24 per share.
3. Resold 50 shares of treasury stock for $25 per share.

Required:

1. How many shares of common stock were outstanding at the end of the period?
2. How many shares of common stock had been issued at the end of the period?
3. Organize the transactions data in accounts under the accounting equation.
4. Prepare the stockholders’ equity section of the balance sheet reflecting these transactions. Include the number of shares authorized, issued, and outstanding in the description of the common stock.
   The following information pertains to JAE Corp. at January 1, 2018: $16,000 13,200 60,800 Common stock, $8 par, 10,000 shares authorized, 2,000 shares issued and outstanding Paid-in capital in excess of par, common stock Retained earnings JAE Corp. completed the following transactions during 2018: 1. Issued 850 shares of $8 par common stock for $27 per share. 2. Repurchased 250 shares of its own common stock for $24 per share. 3. Resold 50 shares of treasury stock for $25 per share. Required: a. How many shares of common stock were outstanding at the end of the period? b. How many shares of common stock had been issued at the end of the period? c. Organize the transactions data in accounts under the accounting equation. d. Prepare the stockholders' equity section of the balance sheet reflecting these transactions. Include the number of shares authorized, issued, and outstanding in the description of the common stock.
   

Answer 1

Answer -

Information Given -

JAE Corp. at January 1, 2018:

• Common stock, $8 par, 10000 shares authorized, 2000 shares issued and outstanding = $16000.
• Paid-in capital in excess of par, common stock = $13200.
• Retained earnings = $60800.

JAE Corp. completed the following transactions during 2018:

• Issued 850 shares of $8 par common stock for $27 per share.
• Repurchased 250 shares of its own common stock for $24 per share.
• Resold 50 shares of treasury stock for $25 per share.

.

Part - (a) - Calculation of Number of shares of common stock were outstanding at the end of the period -

Particulars	Calculation / Remarks	Number of shares
Shares outstanding at the beginning of period	Given in question	2000
Add - Shares issued during the period	Given in question	850
Less - Shares Repurchased as treasury stock	Given in question	(250)
Add - Resold treasury stock	Given in question	50
Number of shares of common stock were outstanding at the end of the period		2650

.

Part - (b) - Calculation of Number of shares of common stock issued at the end of the period -

Particulars	Calculation / Remarks	Number of shares
Shares issued at the beginning of period	Given in question	2000
Add - Shares issued during the period	Given in question	850
Number of shares of common stock issued at the end of the period		2850

.

Part - (c) -

JAE CORPORATION

Accounting Equation for the Year 2018

Assets

Liabilities

Stockholder's Equity

Event

Cash

=

+

Common Stock

+

Paid-in Capital In Excess Common Stock

+

Paid-in Capital In Excess Treasury Stock

-

Treasury Stock

+

Retained Earnings

Beg.bal.

$90000 [$16000+$13200+$60800]

=

-

+

$16000

+

$13200

+

-

+

-

+

$60800

1.

$22950 [850 shares * $27 per share]

=

-

+

$6800 [850 shares * $8 per share]

+

$16150 [850 shares * $19 per share]

+

-

+

-

+

-

2.

-$6000 [250 shares * $24 per share]

=

-

+

-

+

-

+

-

+

-$6000 [250 shares * $24 per share]

+

-

3.

$1250 [50 shares * $25 per share]

=

+

-

+

-

+

$50 [50 shares * $1 per share]

+

$1200 [50 shares * $24 per share]

+

-

End.bal.

$108200

=

-

+

$22800

+

$29350

+

$50

+

-$4800

+

$60800

.

Part - (d) -

JAE CORPORATION

Balance Sheet ( Partial ) As of December 31

Stockholder's Equity
Common stock, $8 par, 10000 shares authorized, 2850 shares issued and 2650 shares outstanding	$22800 [ refer part - (c) working for calculations ]
Additional paid-in capital
Paid-in capital in excess of par, Common stock	$29350 [ refer part - (c) working for calculations ]
Paid-in capital in excess of par, Treasury stock	$50 [ refer part - (c) working for calculations ]
Total paid-in capital		$52200
Retained earnings		$60800
Less - Treasury stock,at cost ( 200 shares at $24 )		-$4800
Total Stockholder's Equity		$108200