Can someone show me how I do this? The shareholders’ equity section of Superior

Question

Can someone show me how I do this?

The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows:

The following events occurred during 2016:

Required:

Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 30,000 shares $3,000,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 400,000 shares 2,000,000 Paid-in capital in excess of par—preferred 90,000 Paid-in capital in excess of par—common 850,000 Retained earnings 3,000,000 $8,940,000

Explanation / Answer

1.Superior Corporation

Journal

2. Number of authorized, issued and outstanding shares of common stock = 400,000 + 10,000 - 80,000 + 25,000 = 355,000

3. Superior's legal capital as of December 31, 2016:

Common stock : Number of shares outstanding x par value = 355,000 x $ 5 = $ 1,775,000

Preferred stock: Number of shares outstanding x par value = 43,000 x $ 100 = $ 4,300,000

Total legal capital = $ 1,775,000 + $ 4,300,000 = $ 6,075,000

Date Account Titles Debit Credit 2016 $ $ Jan 5 Cash 80,000 Common stock 50,000 Paid-in capital in excess of par-common 30,000 Jan 16 Cash 1,090,000 Preferred stock 1,000.000 Paid-in capital in excess of par-preferred stock 90,000 April 1 Treasury stock 1,520,000 Cash 1,520,000 Sept 1 Land 327,000 Preferred stock 300,000 Paid-in capital in excess of par-preferred stock 27,000 Dec 1 Cash 600,000 Treasury stock 475,000 Paid-in capital in excess - treasury stock 125,000

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