Question
Using Comparative balance sheet info: The difference between comparative balance sheet amounts indicates the activity that has transpired during the year. When looking at the
Using Comparative balance sheet info: The difference between comparative balance sheet amounts indicates the activity that has transpired during the year. When looking at the financial statements of a company, we can determine the number of shares that have been issued over the life of the company. The account balance in the Common Stock account and Preferred Stock accounts on the financial statements and the general ledger represents the number of shares issued times the par value. If the account balance and the par value are known, the number of shares issued can be calculated. Use the information for Annex Company to answer the following questions.
Annex Company: |
| 2016 | 2015 | Difference |
Common stock, $4 par |
| 200,000 | 180,000 |
|
Additional Paid in Capital-cs (APIC) |
| 600,000 | 450,000 |
|
Retained Earnings |
| 185,000 | 169,000 |
|
Total Stockholders equity |
| $985,000 | $799,000 |
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Calculate the Difference by subtracting the 2015 amount from the 2016 balances. What transaction occurred to cause the accounts common stock and Additional Paid In Capital to change?
Add the differences for the two accounts together to determine the amount of cash received when Annex Company issued stock during 2016:
Difference in Common Stock account |
|
Difference in APIC account | |
Cash received |
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Since only the par value of the stock issued is credited to the common stock account, we can determine how many shares were issued by dividing the difference in this account by the par value of the stock. Calculate the number of shares issued during 2016:
Difference in Common Stock account |
|
Par value of common stock | |
Number of shares issued during 2016 |
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Dividends are calculated based on the number of shares outstanding on the date of dividend declaration. Assume Annex Company declares dividends on year end 2016 when the yearend balance in common stock account equal the yearend balance of $200,000. Calculate the number of shares issued to date (over the life of the company.
Balance of Common Stock YE 2016 |
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Par value of common stock | |
Number of shares issued to date |
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Outstanding shares are the number of shares held by outside investors. This number can be calculated as the number of shares issued to date minus the number of treasury stock held by the company. Assume Annex Company holds 1,000 shares of treasury stock, calculate the number of outstanding shares for Annex Company.
Number of shares issued to date |
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Less: number of treasury stock | - |
Number of shares outstanding |
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Retained earnings is increased by a companys Net Income and decreased by the dividends a company pays. Assume Annex Company paid $40,000 of dividends during the year. Calculate the Net Income for 2016 for the company.
Difference in Retained Earnings account |
|
Dividends Paid | |
Net Income for 2016 |
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