Question

on december 31 westworld inc has the following equity accounts and balances: retained earning 51000 common stock 2200 treasury stock 3200 paid in capital in excess of par value common stock 40200 preferred stock 8200 and paid in capital in excess par value preferred stock 4200 Prepare the stockholders’ equity section of Westworld’s balance sheet.

Answer 1

Answer:

Stockholders’ equity

Common Stock                                                         $2,200

Preferred Stock                                                         $8,200

Paid-in Capital in Excess of Par - Common Stock   $40,200

Paid-in Capital in Excess of Par - Preferred Stock  $8,200

Retained Earnings                                                     $51,000

Treasury Stock (10,000 common shares)                ($3,200)

Total Stockholders’ equity                                        $106,600

Explanation:

Stockholders Equity Includes the book value of common stock, Preferred stock, Treasury stock and Retained earning.

Common and Treasury Stock are recorded as their issuance value, which  include Par value. Add in Capital is the excess of par value, when stock is issued at price above par value.

Treasury stock balance includes the value of own share repurchased by the company. It is a contra equity account and has debit nature.

Retained earning is the balance of accumulated earnings after paying dividends.