Kinkaid Co. is incorporated at the beginning of this year and engages in a numbe

Question

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

Required:
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $793,000?

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Req 2 to 4

How many shares of common stock are outstanding at year-end? What is the amount of minimum legal capital (based on par value) at year-end? What is the total paid-in capital at year-end?

2. Number of outstanding shares __________

3. Minimum legal capital _________

4. Total paid-in capital _________

Req 5

What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $793,000?

General Journal Debit Credit a. Cash 260,000 Common Stock, $25 Par Value 250,000 Paid-In Capital in Excess of Par Value, Common Stock 10,000 b. Organization Expenses 170,000 Common Stock, $25 Par Value 128,000 Paid-In Capital in Excess of Par Value, Common Stock 42,000 c. Cash 45,500 Accounts Receivable 15,500 Building 82,400 Notes Payable 59,800 Common Stock, $25 Par Value 53,600 Paid-In Capital in Excess of Par Value, Common Stock 30,000 d. Cash 125,000 Common Stock, $25 Par Value 78,000 Paid-In Capital in Excess of Par Value, Common Stock 47,000

Explanation / Answer

2.  Number of outstanding shares

Issued in (a) = 250,000 /25 = 10,000

Issued in (b) = 128000 /25 = 5120

Issued in (c) = 53600 /25 = 2144

Issued in (d) = 78000 / 25 = 3120

10,000 + 5120 +2144 +3120 = 20384 shares outstanding

3)  Minimum legal capital= Outstanding shares × Par value per share

= 20384 X 25 = 509600

4) From transaction (a) 260,000

From transaction (b) 170,000

From transaction (c) 83600 ( 53600 + 30000)

From transaction (d) 125000

Total contributed capital 638600

5) Stockholders' equity applicable to common shares/Number of common shares outstanding=Book value per common share

793000 / 20384 = 38.9 per share

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