Please explain the answer, thank you! On January 2, 2018, XYZ Corp issues 3,000,
ID: 2523687 • Letter: P
Question
Please explain the answer, thank you!
On January 2, 2018, XYZ Corp issues 3,000,000 shares with a $1 par value. The shares are issued at an average price of $10. Also, 1,000,000 ($5 par value) shares of preferred stock are issued at $20 per share.
Assume that on June 30, 2018, XYZ Corp reacquires 200,000 shares at a price of $12 per share. On July 31, 2018, 50,000 treasury shares are sold at $15 per share and on December 30, 2018, 50,000 treasury shares are sold at $10 per share.
Assuming that net income during 2018 was $4,000,000, determine the amount of shareholder's equity that XYZ Corp will record on December 31, 2018.
Explanation / Answer
determine the amount of shareholder's equity that XYZ Corp will record on December 31, 2018.
Common stock 3000000 Paid in capital in excess of par value-Common stock 27000000 Preferred stock 5000000 Paid in capital in excess of par value-preferred stock 15000000 Total paid in capital 50000000 Retained earnings 3900000 Total 53900000 Less: Treasury stock -2400000 Total stockholder's equity 51500000