Exercise 10-42 Preparation of Stockholders\' Equity Section Stahl Company was in

ID: 2430412 • Letter: E

Question

Exercise 10-42
Preparation of Stockholders' Equity Section

Stahl Company was incorporated as a new business on January 1, 2011. The company is authorized to issue 600,000 shares of $2 par value common stock and 80,000 shares of 6 percent, $20 par value, cumulative preferred stock. On January 1, 2011, the company issued 75,000 shares of common stock for $15 per share and 5,000 shares of preferred stock for $25 per share. Net income for the year ended December 31, 2011, was $500,000.

Prepare the stockholders' equity section of the balance sheet for Stahl Company.

Stahl Company

Balance Sheet (Partial)

December 31, 2011

Stockholders' equity:

Additional paid-in capital:

Total capital stock

Total stockholders' equity

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Prepare the stockholders' equity section of the balance sheet for Stahl Company.

Stahl Company

Balance Sheet (Partial)

December 31, 2011

Stockholders' equity:

Additional paid-in capital:

Total capital stock

Total stockholders' equity

Explanation / Answer

Answer

Working

Stahl Company

Balance Sheet (Partial)

December 31, 2011

Stockholder's Equity:

[75,000 shares issued, $ 2 par]

Common Stock

$ 150,000.00

[5,000 shares issued, $ 20 par]

Preferred Stock

$ 100,000.00

Additional paid in Capital:

[75,000 shares issued, $ (15 - 2 par)]

In excess of Par - Common Stock

$ 975,000.00

[5,000 shares issued, $ (25 - 20 par)]

In excess of Par - Preferred Stock

$ 25,000.00

$ 1,000,000.00

Total Capital Stock

$ 1,250,000.00

[Net Income]

Retained Earnings

$ 500,000.00

Total Stockholder's Equity

$ 1,750,000.00