Global Marine obtained a charter from the state in January that authorized 1,000

Question

Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $300,000 of net income and the following selected transactions occurred in the order given

Prepare the stockholders’ equity section of the balance sheet at December 31.

Is this right??? Please help!!!!

Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $300,000 of net income and the following selected transactions occurred in the order given

Explanation / Answer

All is right, just one rectification:-

The amount to be deducted for 'Treasury Stock, at cost' should be $200,000

Reason:- Cost of Treasury is $40 and treasury stock still outstanding is 5,000 (15,000 -5,000 - 5,000). So, $40 * 5,000 = $200,000

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