Top Tech, Inc. Stockholders\' Equity Section at the end of last year was as foll
ID: 2486446 • Letter: T
Question
Top Tech, Inc. Stockholders' Equity Section at the end of last year was as follows:
Paid In capital:
Preferred Stock, 150,000 Shs. Authorized, 80,000 Outstanding, $20 Par, 6% divdend rate 1,600,000
Common Stock, 70,000 Shs. Issued and Outstanding, $10 Par 700,000
Total Paid in Capital 2,300,000
Retained Earnings 324,500
Total Stockholders' Equity 2,624,500
Req. #1, give general journal entries for the following transactions that took place this year:
1 Sold 5,000 shares of Pfd. Stock for $22/Sh.
2 Bought back 5,000 shs of the common stock that were outstanding. Paid $17/Sh.
3 Sold 3,000 of the shares bought back in prior transaction. Received $12/Sh.
4 Give 3rd closing enrty with the corp. earning 38,000 for the year.
Req. #2 prepare Top Tech, Inc. Stockholders' Equity Section at the end of this year.
Req. #3 calculate common stock book value per share at the end of last year and at the end of this year.
Explanation / Answer
1. Cash Dr. 110000 (5000*22)
To Preferred Stock 100000 (5000*20)
To Capital Premium 10000 (5000*2)
2. Capital A/c Dr 50,000 (5000*10 - par value)
Capital Premium A/c 10000 (5000*7 - subject to available balance ie 10,000)
Retained Earnings A/c 25000 ( ie 35000-10000)
To Cash 85000 (5000*17)
3. Cash A/c Dr. 36000 (3000*12)
To Capital Premium 6000 (3000*2)
To Common Stock 30000 (3000*10)
4. No entry
Req 2#
Preferred Stock 85,000 shares @ 20 each - 1,700,000
Common Stock 68,000 shares @ 10 each - 680,000
Capital Premium 6000
Retained Earnings 337,500
Req 3# At the end of last year:
Book value = RE / no of shares = 324500/ 70000 = 4.64
At the end of this year = 337,500 / 68000 = 4.96