The stockholders\' equity account balances of Kay Corporation for 2020 are given

Question

 The stockholders' equity account balances of Kay Corporation for 2020 are given below:                                                           January 1      December 31 Common stock ($12 par, 54,000 shares outstanding) .....   648,000         720,000 Paid-in capital – common stock ........................   540,000         594,000 Treasury stock (10,000 share; $16 cost per share) .....   160,000          36,800 Paid-in capital – treasury stock ......................     5,000            ? Retained earnings .....................................   425,000            ?  During 2020, Kay Corporation entered into the following transactions:  March 23     Re-issued 2,400 of the treasury shares for $13 per share  June 9       Re-issued 3,700 of the treasury shares for $22 per share  August 15    Issued 6,000 shares of previously un-issued common stock  November 2   Re-issued 1,600 of the treasury shares for $14 per share  December 18  Declared and paid a $3.75 dividend per share on the              outstanding shares of common stock  Kay Corporation reported a net income of $293,670 for 2020.  Calculate the balance in the retained earnings account at December 31, 2020.

Explanation / Answer

Solution:

Grouper Inc. - Statement of Retained Earnings on 31.12.2020 Particulars Amount Opening balance $425,000.00 Add: Income for 2020 $293,670.00 Less: Dividend Paid (57700 * $3.75) $216,375.00 Less: Loss on sale of treasury stock (2400*3 - $5,000) $2,200.00 Ending balance of Retained Earnings $500,095.00

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