The balance sheet of Mansion Enterprises includes the following stockholders\' e
ID: 2481942 • Letter: T
Question
The balance sheet of Mansion Enterprises includes the following stockholders' equity section:
Required:
1. Assume that Mansion issued 30,000 shares for cash at the inception of the corporation and that no new shares have been issued since. Determine how much cash was received for the shares issued at inception.
$________________
2. Assume that Mansion issued 15,000 shares for cash at the inception of the corporation and subsequently declared a 2-for-1 stock split. Determine how much cash was received for the shares issued at inception.
___________________
3. Assume that Mansion issued 25,000 shares for cash at the inception of the corporation and that the remaining 5,000 shares were issued as the result of stock dividends that capitalized retained earnings of $21,600. Determine how much cash was received for the shares issued at inception.
$Hint: Contributed capital represents the owner’s contributions in exchange for stock. Small stock dividends are capitalized using the stock’s market value, while large stock dividends are capitalized at the stock’s par value.
_______________
Capital stock: Common stock, $2 par, 50,000 shares authorized,30,000 shares issued and outstanding $ 60,000 Additional paid-in capital--Common Stock 72,700 Total capital stock $132,700 Retained earnings 73,000 Total equity $205,700
Explanation / Answer
1.
cash was received for the shares issued at inception=Common stock+Additional paid-in capital Common Stock
=$60,000+$72,700=$132,700
2.
cash was received for the shares issued at inception=Common stock+Additional paid-in capital Common Stock
=$60,000+$72,700=$132,700
3.
cash was received for the shares issued at inception=Common stock+Additional paid-in capital Common Stock-5,000 shares were issued as the result of stock dividends that capitalized retained earnings
=$60,000+$72,700-$21,600=$111,100
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.