Part1: Prepare the stockholders equity section Power Drive Corporation designs a
ID: 2415445 • Letter: P
Question
Part1: Prepare the stockholders equity section
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2015. Power Drive has the following transactions affecting stockholders’ equity in 2015.
March1 Issues 45,000 additional shares of $1 par value common stock for $42 per share.
May10 Repurchases 4,000 shares of treasury stock for $45 per share.
June1 Declares a cash dividend of $1.00 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July1 Pays the cash dividend declared on June 1.
October21 Reissues 2,000 shares of treasury stock purchased on May 10 for $50 per share.
Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2015: Common Stock, $100,000; Additional Paid-in Capital, $3,500,000; and Retained Earnings, $1,000,000. Net income for the year ended December 31, 2015, is $500,000.
Part2: Prepare a statement of stockholders equity
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2015. Power Drive has the following transactions affecting stockholders' equity in 2015.
March 1 Issues 49,000 additional shares of $1 par value common stock for $46 per share.
May 10 Repurchases 4,400 shares of treasury stock for $49 per share.
June 1 Declares a cash dividend of $1.20 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Reissues 2,200 shares of treasury stock purchased on May 10 for $54 per share.
Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2015: Common Stock, $100,000; Additional Paid-in Capital, $3,900,000; and Retained Earnings, $1,400,000. Net income for the year ended December 31, 2015, is $540,000.
Explanation / Answer
Case-1 POWER DRIVE CORPORATION Statement of Stockholders Equity For the year ended December 31,2015 Date Particulars Common Stock Additional Paid up capital Retained Earnings Treasury Stocks Total Share holders Equity Jan 1,2015 Opening Balance 100000 3500000 1000000 0 4600000 March 1,2015 Issue of Additional Shares 45000 1845000 0 0 1890000 May 10,2015 Repurchase of treasury stocks -180000 -180000 July 1,2015 Cash Dividends -145000 -145000 Oct 21,2015 Sale of treasury shares 100000 100000 Dec 31,2015 Net profit for the year 500000 500000 Total 145000 5345000 1355000 -80000 6765000 Case-2 POWER DRIVE CORPORATION Statement of Stockholders Equity For the year ended December 31,2015 Date Particulars Common Stock Additional Paid up capital Retained Earnings Treasury Stocks Total Share holders Equity Jan 1,2015 Opening Balance 100000 3900000 1400000 0 5400000 March 1,2015 Issue of Additional Shares 49000 2205000 0 0 2254000 May 10,2015 Repurchase of treasury stocks -215600 -215600 July 1,2015 Cash Dividends 178800 178800 Oct 21,2015 Sale of treasury shares 118800 118800 Dec 31,2015 Net profit for the year 540000 540000 Total 149000 6105000 2118800 -96800 8276000
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