Analyzing and Identifying Financial Statement Effects of Stock Transactions The
ID: 2512951 • Letter: A
Question
Analyzing and Identifying Financial Statement Effects of Stock Transactions The stockholders' equity section of Gupta Company at December 31,2014, follows 8% preferred stock, $25 par value, 50,000 shares authorized; 6,800 shares issued and outstanding Common stock, $10 par value, 200,000 shares authorized 170,000 50,000 shares issued and outstanding Paid-in capital in excess of par value-preferred stock Paid-in capital in excess of par value-common stock Retained earnings 00,000 68,000 200,000 270,000 During 2015, the following transactions occurred: Jan. 10 Issued 28,000 shares of common stock for $17 cash per share Jan. 23 Purchased 8,000 shares of common stock for the treasury at $19 cash per share Mar. 14 Sold one-half of the treasury shares acquired January 23 for $21 cash per share July 15 Issued 3,200 shares of preferred stock for $128,000 cash. Nov. 15 Sold 1,000 of the treasury shares acquired January 23 for $24 cash per share e. Prepare the December 31, 2015, stockholders' equity section of the ballance sheet assuming the company reports 2015 net income of $59,000. Enter number of shares issued for each stock type. Hint Do not use negative signs with answers Paid-in capital 8% Preferred stock, $25 par value, 50,000 shares authorged; shares issued and outstanding250000 Common stock, $10 parvalue 200,000 shares authorized shares issued Additional paid-in capital 6000 Pwden captain ess et par value-Preferred stock Paid-in capital in escess of par value-Common stck Paid in capital from Treasury stock 3 000 Total paid-in capital Retained earnings 29000 Less: Treasury stock at cst 000 shares 57000 Total stockholders' equityExplanation / Answer
e.
Working:
Preferred stock = 6800 + 3200 = 10000 shares
Common stock = 50000 + 38000 = 78000 shares
78000 shares x $10 = $780000
Paid-in capital in excess of par value-Common stock = $200000 + [28000 x ($17 - $10)] = $200000 + $196000 = $396000
Stockholders' Equity Paid-in capital: 8% Preferred stock, $25 par value, 50,000 shares authorized; 10,000 shares issued and outstanding 250000 Common stock, $10 par value, 200,000 shares authorized; 78,000 shares issued 780000 1030000 Additional paid-in capital Paid-in capital in excess of par value-Preferred stock 116000 Paid-in capital in excess of par value-Common stock 396000 Paid-in capital from Treasury stock 13000 525000 Total paid-in capital 1555000 Retained earnings 329000 1884000 Less: Treasury stock at cost 3000 shares 57000 Total stockholders' equity 1827000