Stockholders\' Equity. Given the following information for Company G at 1/1/16:

Question

Stockholders' Equity. Given the following information for Company G at 1/1/16:

Retained earnings at 1/1/16 were $800,000.

Common stock at 1/1/16 was $ 300,000.

Additional Paid-in Capital at 1/1/16 was $900,000.

The description of the common stock at 1/1/16 was: $10 par value, 100,000 shares authorized, 30,000 shares issued and outstanding.

During 2016 (its second year), Company G had the following activity:

1. The income statement reflected net income of $200,000 for the year ended 12/31/16.

2. Cash dividends of $1 per share were declared and paid to the common shareholders in February of 2016.

3. On June 1, 2016, Company G declared a 100% stock dividend.

4. On July, 1, 2016, Company G distributed the 100% stock dividend.

5. On September 1 of 2016, Company G repurchased 2,000 shares of its own stock at $23 per share. Company G uses the cost method to account for treasury stock transactions.

6. On December 1 of 2016, Company G reissued 600 shares of the treasury stock at $21 per share.

On the answer sheet, complete the Statement of Stockholders’ Equity for Items 1 – 6 above.

Explanation / Answer

STATEMENT OF STOCKHOLDERS' EQUITY For the year ending December 31, 2016 Common Stock Additional Paid in Capital-Common stock Retained Earnings Treasury Stock Paid in capital-Treasury stock Total Stockholders Equity Balance on 1/1/16 $300,000 $900,000 $800,000 $2,000,000 1 Net Income $200,000 $200,000 2 Cash Dividend ($30,000) ($30,000) (30000*$1) 3 Stock Dividend(100%) $300,000 ($300,000) $0 (30000*$10)(Large Stock dividend) 4 Stock Dividend(100%) $600,000 ($600,000) $0 (60000*$10)(Large stockdividend) 5 Purchase of Treasury Stock($23) ($46,000) ($46,000) (2000*23) 6 Issued of Treasury shares ($21) $13,800 ($1,200) $12,600 (600*23)=13800: (600*$2)=$1200 Balance on December 31, 2016 $1,200,000 $900,000 $70,000 ($32,200) ($1,200) $2,136,600

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