The stockholders\' equity section of Kay Corporation at December 31, 2005 includ
ID: 2471398 • Letter: T
Question
The stockholders' equity section of Kay Corporation at December 31, 2005 included the following accounts:
Preferred stock (9%, $40 par, 6,000 shares issued & outstanding) ........ $240,000
Common stock ($8 par, 65,000 shares issued, 61,000 shares outstanding) .. .....................................................................................................................520,000
Paid-in capital – preferred stock ....................................... ?
Paid-in capital – common stock .......................................... 584,000
Retained earnings ....................................................... 152,000
Treasury stock (4,000 shares at $15 cost) .............................. 60,000
Assume the preferred stock was issued for an average price of $48 per share. Calculate the total stockholders' equity at December 31, 2005. Do not use decimals in your answer.
Explanation / Answer
Answer:
Calculation of Total Stockholder's Equity at December 31, 2005
Common Stock
$520,000
Preferred Stock
$240,000
Paid In Capital-Common Stock
$584,000
Paid In Capital-Preferred Stock (refer note 1)
$48,000
Retained Earnings
$152,000
Less: Treasury Stock
($60,000)
Total Stockholder's Equity at December 31, 2005
$1,484,000
Note 1- Paid in Capital Preferred Stock = (Issue Price - Par value) x number of Shares
= ($48 - $40) x 6,000 = $48,000
Calculation of Total Stockholder's Equity at December 31, 2005
Common Stock
$520,000
Preferred Stock
$240,000
Paid In Capital-Common Stock
$584,000
Paid In Capital-Preferred Stock (refer note 1)
$48,000
Retained Earnings
$152,000
Less: Treasury Stock
($60,000)
Total Stockholder's Equity at December 31, 2005
$1,484,000
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