identifying and analyzing financial statement effects of stock transactions 461450

Aug 29, 2021 | Uncategorized

The stockholders’ equity of Verrecchia Company at December 31, 2008, follows:

Common stock, $5 par value, 350,000 shares authorized;
170,000 shares issued and outstanding

$850,000

Paid-in capital in excess of par value

600,000

Retained earnings

346,000

During 2009, the following transactions occurred:

Jan. 5

Issued 10,000 shares of common stock for $11 cash per share.

Jan. 18

Purchased 4,000 shares of common stock for the treasury at $15 cash per share.

Mar. 12

Sold one-fourth of the treasury shares acquired January 18 for $19 cash per share.

July 17

Sold 500 shares of the remaining treasury stock for $14 cash per share.

Oct. 1

Issued 5,000 shares of 8%, $24 par value preferred stock for $40 cash per share.
This is the first issuance of preferred shares from the 50,000 authorized shares.

Prepare the December 31, 2009, stockholders’ equity section of the balance sheet assuming that the company reports net income of $72,500 for the year.

Stockholders’ Equity

Paid-in capital:

8% Preferred stock, $24 par value,
50,000 shares authorized, 5,000
shares issued and outstanding:

Common stock, $5 par value, 350,000
shares authorized; 180,000 shares
issued:

Additional paid-in capital
Paid-in capital in excess of par
value-preferred stock:

Paid-in capital in excess of par
value-common stock:

Paid-in capital from treasury stock:

Total paid-in capital:

Retained earnings:

Less: Treasury stock (2,500 shares) at cost

:

Total Stockholders’ Equity: