Dirk Company reported the following balances at December 31, 2016: common stock

Question

Dirk Company reported the following balances at December 31, 2016: common stock $401,000, paid-in capital in excess of par value—common stock $105,000, and retained earnings $241,000. During 2017, the following transactions affected stockholders' equity.

Prepare the stockholders’ equity section of Dirk Company’s December 31, 2017, balance sheet.

1. Issued preferred stock with a par value of $124,000 for $210,000. 2. Purchased treasury stock (common) for $44,000. 3. Earned net income of $141,500. 4. Declared and paid cash dividends of $52,000.

Explanation / Answer

Statement of Stockholder equity Amount Paid In Capital Common Stock    401,000.00 Add: Preference shares issued    124,000.00 Less: Treasury Stock      44,000.00 Closing balance    481,000.00 Additional Paid In Capital Common Stock    105,000.00 Preferred Stock      86,000.00 Closing balance    191,000.00 Retained Earnings Opening balance    241,000.00 Add: Income during the year    141,500.00 Less: Dividends paid      52,000.00 Closing balance    330,500.00

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