Question
Company A designs and produces a line of golf equipment and golf apparel. Company A has 100,000 shares of common stock outstanding as of the
Company A designs and produces a line of golf equipment and golf apparel. Company A has 100,000 shares of common stock outstanding as of the beginning of Year 1. Company A has the following transactions affecting stockholders' equity in Year 1.
March | 1 | Issues 55,000 additional shares of $1 par value common stock for $52 per share. | ||
May | 10 | Purchases 5,000 shares of treasury stock for $55 per share. | ||
June | 1 | Declares a cash dividend of $1.50 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 2,500 shares of treasury stock purchased on May 10 for $60 per share. |
Company A has the following beginning balances in its stockholders' equity accounts on January 1, Year 1: Common Stock, $100,000; Additional Paid-in Capital, $4,500,000; and Retained Earnings, $2,000,000. Net income for the year ended December 31, Year 1, is $600,000. Required: Prepare the statement of stockholders' equity for Company A for the year ended December 31, Year 1. (Amounts to be deducted should be indicated by a minus sign.)
Answer is complete but not entirely correct. Company A Statement of Stockholders' Equity For the Year Ended December 31, Year 1 Additional Common Retained Paid-in Stock Capital Earnings $ 100,000 $ 4,500,000 $ 2,000,000 2,805,000 X 2,700,000 X Treasury Stock 1$ 0 Balance, January 1 Issue common stock Purchase treasury stock Declare dividends (27,500) X Total Stockholders' Equity $ 6,600,000 28,600 (27,500) X (22,500) X 150,000 60,000 12,265,000 (22,500) X Resell treasury stock 12,500 137,500 Net income 60,000 X 2,037,500 Balance, December 31 $ 2,905,000 7,212,500 110,000 $
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