1. 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 2021. Power Drive has the following transactions affecting stockholders' equity in 2021. March 1 Issues 65,000 additional shares of $1 par value common stock for $62 per share. May 10 Purchases 6,000 shares of treasury stock for $65 per share. June 1 Declares a cash dividend of $2.00 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 3,000 shares of treasury stock purchased on May 10 for $70 per share. Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-in Capital, $5,500,000; and Retained Earnings, $3,000,000. Net Income for the year ended December 31, 2021, is $700,000. a Required: Prepare the stockholders' equity section of the balance sheet for Power Drive Corporation as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.) POWER DRIVE CORPORATION Balance Sheet (Stockholders' Equity Section) December 31, 2021 Stockholders' Equity: Total Paid-in Capital Total Stockholders' Equity $ 0 b. Required: Prepare the statement of stockholders' equity for Power Drive Corporation for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.) POWER DRIVE CORPORATION Statement of Stockholders' Equity For the Year Ended December 31, 2021 Total Additional Retained Common Stock Paid-in Capital Earnings Stockholders Treasury Stock Equity $ 100,000 $ 5,500,000 S 3,000,000 $ 0 $ 8,600,000 Balance, January 1 Issue common stock Purchase treasury stock Declare dividends Resell treasury stock Net income Balance, December 31 $ 100,000 5,500,000 3,000,000 0 $ 8,600,000 2. Select the best term for each definition below. Each Term is used only once. Definitions Terms a. The amount invested by stockholders. b. Shares available to sell. c. Shares can be returned to the corporation at a predetermined price. d. The earnings not paid out in dividends. e. Shares actually sold. f. Shares receive priority for future dividends if dividends are not paid in a given year. g. Shares held by investors. h. Shareholders can lose no more than the amount they invested in the company. Wealthy individuals in the business community willing to risk investment funds on a i. promising business venture. j. The corporation's own stock that it acquired. Select the best term for each definition below. Each Term is used only once. Definitions Terms Angel investors Authorized stock a. The amount invested by stockholders. b. Shares available to sell. c. Shares can be returned to the corporation at a predetermined price. d. The earnings not paid out in dividends. e. Shares actually sold. f. Shares receive priority for future dividends if dividends are not paid in a given year. g. Shares held by investors. h. Shareholders can lose no more than the amount they invested in the company. Wealthy individuals in the business community willing to risk investment funds on a i. promising business venture. j. The corporation's own stock that it acquired. Cumulative Issued stock
