Power Drive Corporation designs and produces a line of golf equipment and golf a

Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2015. Power Drive has the following transactions affecting stockholders’ equity in 2015. March 1 Issues 64,000 additional shares of $1 par value common stock for $61 per share. May 10 Repurchases 5,900 shares of treasury stock for $64 per share. June 1 Declares a cash dividend of $1.95 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) July 1 Pays the cash dividend declared on June 1. October 21 Reissues 2,950 shares of treasury stock purchased on May 10 for $69 per share. Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2015: Common Stock, $100,000; Additional Paid-in Capital, $5,400,000; and Retained Earnings, $2,900,000. Net income for the year ended December 31, 2015, is $690,000. Required: Prepare the stockholders’ equity section of the balance sheet for Power Drive Corporation as of December 31, 2015.

Explanation / Answer

Stockholders Equity Section Common stock retained earnings total Opening 100000 2900000 3000000 Additional paid in capital 5400000 5400000 Add:net income for the year 690000 690000 Issued shares 64000 64000 Additional paid in capital 4032000 4032000 Repurchases shares -377600 -377600 Declares dividend -308295 -308295 reissues treasury stock 203550 203550 9421950 3281705 12703655

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