Question

Court Casuals has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $110,000; Additional Paid-in Capital, $4,100,000; and Retained Earnings, $3,000,000. Net income for the year ended December 31, 2021, is $800,000. Court Casuals has the following transactions affecting stockholders' equity in 2021:May 18 Issues 25,000 additional shares of $1 par value common stock for $60 per share.May 31 Repurchases 3,500 shares of treasury stock for $40 per share.July 1 Declares a cash dividend of $1 per share to all stockholders of record on July 15. Hint: Dividends are not paid on treasury stock.July 31 Pays the cash dividend declared on July 1.August 10 Reissues 2,750 shares of treasury stock purchased on May 31 for $56 per share.Taking into consideration all the entries described above, prepare the statement of stockholders' equity for the year ended December 31, 20121, using the format provided.

Answer 1

Answer:common stock $1,610,000, paid in capital $4,100,000, Retained Earning $3,775,000, Treasury stock $ 184,000, Total stock holding equity $9,669,000

Explanation:

Court casuals statement of stockholder Equity for the year ended December 31 2021

Common Stock. Paid in capital Retained earning Treasury stock Total

$ $ $ $ $

Balance on Jan 1. 110,000. 4,100,000. 3,000,000. 44,000. 7,254,000

Issued share for cash 1,500,000. 1,500,000

Purchase of treasury stock. 140,000. 140,000

Net income. 800,000. 800,000

Cash dividend. (25,000) (25,000)

-------------- -------------- ------------------ ---------------- -----------

Balance on Dec 31. 1,610,000. 4,100,000. 3,775,000. 184,000 9,669,000

--------------- ----------------- -------------------- --------------- ----------------

Workings

Additional shares issued = 25,000 × 60 = 1,500,000

Cash dividend 25,000÷ 1 = 25,000

Re issued shares of treasury stock 2,750 × 56 = 154,000, then the value is deducted from opening balance of stock 154,000 - 110,000 = 44,000