United Resources Company obtained a charter from the state in January 2014, whic

Question

United Resources Company obtained a charter from the state in January 2014, which authorized 208,000 shares of common stock, $3 par value. During the first year, the company earned $489,000 and the following selected transactions occurred in the order given:

a. Sold 86,000 shares of the common stock in an initial public offering at $19 per share.

b. Repurchased 21,000 shares of the previously issued shares at $22 cash per share for treasury stock.

c. Resold 5,000 of the shares of the treasury stock at $25 cash per share.

Explanation / Answer

United resource company Particulars Calculation amount contributed capital Common stock and additional paid in capital (208000 shares authorized) 86000 at 3 par value 258000 Capital in excess of par value 86000 at (19-3) 1376000 Repurchase of issued shares 21000 at 22 -462000 Increase in treasury stock 21000 at 22 462000 sold tresaury stock 5000 at 25 -125000 Total contributed capital 1509000 Retained earnings 489000 Total contributed and retained earnings 1998000 Net income /Loss during the year 0 Total stock holders equity 1998000

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