Chap 11, Problem 3E

Stockholder's Equity Section of a Balance Sheet.

When Resisto Systems, Inc. was formed, the company was authorized to issue 5,000 shares of $100 par value, 8 percent cumulative preferred stock, and 100,000 shares of $2 stated value common stock.

Half of the preferred stock was issued at a price of $103 per share, and 70,000 shares of the common stock were sold for $13 per share. At the end of the current year. Resisto has retained earnings of $475,000.

a. Prepare the stockholder's equity section of the company's balance sheet at the end of the current year.

b. Assume Resisto System's common stock is trading at $24 per share and its preferrede stock is trading at $107 per share at the end of the current year. Would the stockholder's equity section prepared in part a be affected by this addtional information?

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COULD YOU PLEASE VERIFY IF THE BELOW ANSWER IS CORRECT, Thanks, Angelo

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A*

Stockholders equity:

8% preferred stock, $100 par value,

5,000 shares authorized, issued, and outstanding . ..$500,000

Common stock, $2 stated value, authorized 100,000

Shares, issued and outstanding.$200,000

Additional paid-in capital:

Preferred stock...$15,000

Common stock..... $1,100,000

Total paid-in capital...1,815,000

Retained earnings$475,000

Total stockholders equity...$2,290,000

B*

The capital will be annotated on the stockholders equity section at the value sold. The stockholders equity section prepared in part a will not be affected by this additional information.

In the Financial & Managerial Accounting (17th Edition) Chap 11, Problem 3E - Shouldn't it be half of the preferred stock 2,500 * $3 and 70,000 of common stock be $11 * 70,000??? The answer it has is the full amounot preferred and common.

15,000 (5,000 shares at $3) = 15,000

1,100,00 (100,000 shares at $11) = 1,100,000 - Please clarify and confirm. Appreciate your assistnance. Angelo