Answer:
Power Drive Corporation
Stockholders' Equity Section
December 31, 2021
Paid in capital:
Common Stock $1 par $160,000
(160,000 shares authorized, 157,250
shares outstanding)
Additional paid in capital, $8,360,000
in excess of par value
Additional paid in capital, $13,750
from Treasury Stock <u> </u>
Total paid in capital $8,533,750
Retained earnings <u>$2,879,625</u>
Sub-total $11,413,375
Treasury Stock <u> ($165,000)</u>
Total Stockholders' Equity $11,248,375
Explanation:
- beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000 + $60,000
- Additional Paid-in Capital, $5,000,000 + $3,360,000 + $13,750
- Retained Earnings, $2,500,000 + $650,000 - $270,375
- treasury stock $330,000 - $165,000
Net income for the year ended December 31, 2021, is $650,000.
March 1 Issues 60,000 additional shares of $1 par value common stock for $57 per share.
Dr Cash 3,420,000
Cr Common stock 60,000
Cr Additional paid in capital 3,360,000
May 10 Purchases 5,500 shares of treasury stock for $60 per share.
Dr Treasury stock 330,000
Cr Cash 330,000
June 1 Declares a cash dividend of $1.75 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
Dr Retained earnings 270,375
Cr Dividends payable 270,375
July 1 Pays the cash dividend declared on June 1.
Dr Dividends payable 270,375
Cr Cash 270,375
October 21 Resells 2,750 shares of treasury stock purchased on May 10 for $65 per share
Dr Cash 178,750
Cr Treasury stock 165,000
Cr Additional paid in capital 13,750
