INTERMEDIATE ACCOUNTING II HANDOUT PROBLEM 3 Score Name Section Problem (10 poin

Question

INTERMEDIATE ACCOUNTING II HANDOUT PROBLEM 3 Score Name Section Problem (10 points). Berlin Company is a public company whose shares are traded in the over the counter (OTC) market At December 31, 20X6, Berlin had 6,000,000 authorized shares of $5 par value common stock, of which 2,000,000 shares were issued and outstanding. Berlin also had the following stockholders equity accounts on their balance sheet at December 31, 20X6 (all had their normal balances). BERLIN COMPANY STOCKHOLDERS' EQUITY ACCOUNTS AT DECEMBER 31, 20X6 Common Stock Additional Paid In Capital Retained Earnin 0,000,000 7,500,000 3,250,000 gs Transactions that occurred during 20X7 and other information relating to the stockholders' equity accounts are attached. REQUIRED: () Prepare a statement of changes in stockholders' equity for the year ending December 31, 20X7. Assume that comparative financial statements are not bein ing prepared Prepare the stockholders' equity section of Berlin's balance sheet at December 31, 20X7 (2) (3) Compute the book value per share of common stock at December 3,20X7 Round your answer to the nearest cent.

Explanation / Answer

1. Statement of changes in Stockholder's equity: as on Dec 31, 20X6 Common Stock Addi Paid in capital-CS Retained Earnings 9% Preferred Stock Addi. Paid in Capital-PS Treasury Stock 10000000 7500000 3250000 1 5000000 400000 2 -320000 3 4 2500000 3500000 5 -2500000 6 50000 160000 7 -450000 8 -200000 9 2250000 Total 12500000 11050000 2350000 5000000 400000 -160000 2. Statement of Shareholder's Equity: Common Stock 2500000 shares @ $5 par 12500000 Preferred Stock 100000 shares @ $50 par 5000000 Capital contributed 17500000 Addi Paid in capital-CS 11050000 Addi. Paid in Capital-PS 400000 Total share capital 28950000 Add: Retained Earnings 2350000 Less: Treasury Stock -160000 Shareholders Equity 31140000 3. Book Value per Common Stock: Common Stock 2500000 shares @ $5 par 12500000 Addi Paid in capital-CS 11050000 Add: Retained Earnings 2350000 Less: Treasury Stock -160000 Less:Reduced Investment fair value -50000 Total Common Stock Value 25690000 Common Shares outstanding 2500000 Book Value per Common Share - $ 10.276

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