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 2024. Power Drive has the following transactions affecting stockholders' equity in 2024.
March 1 Issues 63,000 additional shares of $1 par value common stock for $60 per share.
May 10 Purchases 5,800 shares of treasury stock for $63 per share.
June 1 Declares a cash dividend of $1.90 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 Resells 2,900 shares of treasury stock purchased on May 10 for $68 per share.
Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2024: Common Stock, $100,000; Additional Paid-in Capital, $5,300,000; and Retained Earnings, $2,800,000. Net income for the year ended December 31, 2024, is $680,000.
Required:
Prepare the stockholders' equity section of the balance sheet for Power Drive Corporation as of December 31, 2024.

Answer 1

The preparation of the stockholders' equity section of the balance sheet for Power Drive Corporation as of December 31, 2024, is as follows:

Power Drive Corporation

Stockholders' Equity Section

As of December 31, 2024

Common Stock, 163,000 shares at $1 par value  $163,000

Treasury Stock, 2,900 shares at $1 par value          (2,900)

Additional Paid-in Capital                                      8,851,700

Retained Earnings                                                 3,081,400

Total equity                                                       $12,093,200

Data and Calculations:

Beginning balances in stockholders' equity accounts on January 1, 2024:

Common Stock, $100,000

Additional Paid-in Capital, $5,300,000

Retained Earnings, $2,800,000

Net income for the year ended December 31, 2024, = $680,000

Transaction Analysis:

March 1 Cash $3,780,000 Common Stock $63,000 Additional Paid-in Capital $3,717,000

May 10 Treasury Stock $5,800 Additional Paid-in Capital $359,600 Cash $365,400

June 1 Cash dividend $398,600 ($1.90 x 157,200) Dividends Payable $398,600

July 1 Dividends Payable $398,600 Cash $398,600

October 21 Cash $197,200 Treasury Stock $2,900 Additional Paid-in Capital $194,300

Summary Accounts

Retained Earnings Statement:

Beginning balance $2,800,000

Net income                  680,000

Dividends                    (398,600)

Ending balance       $3,081,400

Common Stock:

Beginning balance    $100,000

March 1 Cash                 63,000

Ending balance         $163,000

Additional Paid-in Capital,

Beginning balance  $5,300,000

March 1 Cash               3,717,000

May 10 Cash                (359,600)

Oct. 21  Cash                 194,300

Ending balance       $8,851,700

Treasury Stock:

May 10 Cash                $5,800

Oct. 21  Cash                (2,900)

Ending balance          $2,900

Learn more about the stockholders' equity section at brainly.com/question/14032844

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