World Marine obtained a charter from the state in January that authorized 1,000,

Question

World Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $410,000 of net income and the following selected transactions occurred in the order given:

Reissued 10,500 shares from treasury for $50 per share.

1) Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign. Not all blanks have to be filled)

a. Issued 110,000 shares of the common stock at $56 cash per share. b. Reacquired 26,000 shares at $51 cash per share. c. Reissued 10,500 shares from treasury for $52 per share. d.

Reissued 10,500 shares from treasury for $50 per share.

1) Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign. Not all blanks have to be filled)

World MARINE Balance Sheet (Partial) At December 31 Stockholders’ Equity Contributed Capital: ? ? ? ? ? Total Contributed Capital ? ? ? Total ? ? ? Total Stockholders’ Equity ?

Explanation / Answer

Stockholders’ equity section of the balance sheet at December 31 is prepared as under:

World MARINE Balance Sheet (Partial) At December 31 Stockholders’ Equity Contributed Capital: Authorized 1,000,000 shares of common stock, $5 par value Issued 110,000 shares of the common stock at $56 cash per share.    Common Stock stated value 550000    Additional Paid in capital in excess of stated value 5610000 Common stock reissued 26,000 shares at $51 cash per share. 130000    Additional Paid in capital in excess of stated value 1196000 Total Contributed Capital 7486000 Retained Earnings 4,10,000 Less: Treasury stock 10,500 shares from treasury for $52 per share 5,46,000 10,500 shares from treasury for $50 per share 5,25,000 Total 10,71,000 Total Stockholders’ Equity 68,25,000

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