On January 1, 2014, Kessler Inc. had these stockholders’ equity balances. Common

Question

On January 1, 2014, Kessler Inc. had these stockholders’ equity balances. Common Stock, $1 par (2,699,300 shares authorized, 704,500 shares issued and outstanding) $704,500 Paid-in Capital in Excess of Par Value 1,474,100 Retained Earnings 694,500 During 2014, the following transactions and events occurred. 1. Issued 48,800 shares of $1 par value common stock for $3 per share. 2. Issued 61,400 shares of common stock for cash at $5 per share. 3. Purchased 14,900 shares of common stock for the treasury at $4.00 per share. 4. Declared and paid a cash dividend of $140,900. 5. Earned net income of $397,900. Prepare the stockholders’ equity section of the balance sheet at December 31, 201 What is the Common stock ? What is the Total paid in Capital?

Explanation / Answer

Stockequity's Equity at December31,2014 :

common stock {48800shares*$1 + 704500 * $1} $753300

Add: paid in capital in execss of Par value{48800 shres * ($3 - $1) + 1474100} $1571700

Add: Retained Earning( $694500 - 140900 + 397900) $951500   

Less: Treasury stock $59600

   Shareholder equity $3216900

Common Stock : = old Issued + fresh issue - treasury stock

= (704500 share * $1) +    (48800 shares * $1) - (14900shares * $1)

= $738400

Total Paid in capital : = par value + additional paid in capital

= {(704500 + 48800 - 14900) * $1} + {$1474100 + (48800 * ($3- $1)}

= $738400 + $1571700

= $ 2310100

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