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Stream Co.'s stockholders' equity account balances at December 31, year 4, were as follows: Common stock Additional paid-in capital Retained earnings $1,250,000 1,500,000 1,965,000 Scanned
Stream Co.'s stockholders' equity account balances at December 31, year 4, were as follows: Common stock Additional paid-in capital Retained earnings $1,250,000 1,500,000 1,965,000 Scanned with CamScanner . The following year 5 transactions and other information relate to the stockholders' equity accounts: Stream had 500,000 authorized shares of $5 par common stock, of which 180,000 shares were issued and outstanding. On March 5, year 5, Stream acquired 6,000 shares of its common stock for $9 per share to hold as treasury stock. The shares were originally issued at $12 per share. Stream uses the cost method to account for treasury stock. Treasury stock is permitted in Stream's state of incorporation. On July 15, year 5, Stream declared and distributed a property dividend of inventory. The inventory had a $100,000 carrying value and a $80,000 fair market value. On January 2, year 3, Stream granted stock options to employees to purchase 30,000 shares of Stream's common stock at $15 per share, which was the market price on the grant date. The options are valued at $45,000 and may be exercised within a three-year period, beginning January 2, year 5. On October 1 year 5, employees exercised all 30,000 options when the market value of the stock was $23 per share Stream issued new shares to settle the transaction. Stream's net income for year 5 was $260,000. Stream intends to issue new stock options to key employees in year 6. Stream's management is aware that the "fair value" method of accounting for stock options is required. Situation 1 Calculations Situation 21 Balance Sheet Prepare the stockholders' equity section of Stream's December 31, year 5, balance sheet. Support all computations
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