Question

The following is a summary of all relevant transactions of ABC Corporation since it was organized in 2019 16,950 shares were authorized and 8,000 shares of common stock ($50 parvalue) were issued at a price of $60. In 2012, 1,000 shares were issued as a stock dividend when the stock was selling for $68 300 shares of common stock were bought at a costof S72 per share. These 300 shares are still in the company treasury 11,300preferred shares were authorized and the companyissued 5,600 ofthem ($100 par value) at $120. Some ofthe preferred stock was reacquired by the company and later reissued for $5,000 more than it cost the company The corporation has eamed a total of$689,300 in net income after income taxes and paid out a total of $353,200 in cash dividends since incorporation Prepare the stockholders' equity section of the balance sheet in proper form for ABC Corporation as of December 31, 2019. Account for treasury stock using the cost method. ABC CORPORATION Stockholder's Equity December 31, 2019 Capital Stock Preferred stock, $100 par value, 11,300 shares authorized, 5,600 shares issued & outstanding Common stock, а $50 par value, 16,950 shares authorized, 9,000 shares issued;8,700 shares outstanding b Total capital stock Additional paid-in capital Paid-in cap. in exc. of par- common Paid-in cap. in exc. of par-preferred Paid-in cap. from tres. stock-preferred Total paid-in capital C Retained earnings Total paid-in cap. & retained earnings Less: Cost of treasury stock h Total stockholders' equity

Answer 1

a) Preferred stock = 11,130 shares @ $100 par value = $1,113,000 /-

b) Common stock = 16,950 shares @ $50 par value = $ 847,500 /-

c) Total capital stock = $1,113,000 + $847,500 = $1,960,500 /-

d) Paid in capital, in excess of par-common = 8000 shares @ 50 par value = $400,000

e) Paid in capital, in excess of par-preferred = 5,600 shares @ $100 par value = $560,000

f) Paid in capital from treas stock preferred = $5000

g) Total paid in capital = $400,000 + $560,000 + $5,000 = $965,000

h) Retained Earnings =

Stock premium :- 8000 shares * (60-50) + 5600 shares * (120-100) = $192,000

Add: Net Income = $689,300

Less: Cash dividends = $353,200

Retained Earnings $846,000

i) cost of treasury stock = 300 shares @ 72 each = $21,600

j) Total stockholder's equity =

Total paid up capital = $965,000

Add: Retained Earnings = $846,000

Less: Cost of Treasury stock = $21,600

Total Stockholder's Equity = $1,789,400