Kinkaid Co. is incorporated at the beginning of this year and engages in a numbe

Question

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

Required:
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $797,000?

General Journal Debit Credit a. Cash 290,000 Common Stock, $25 Par Value 230,000 Paid-In Capital in Excess of Par Value, Common Stock 60,000 b. Organization Expenses 150,000 Common Stock, $25 Par Value 126,000 Paid-In Capital in Excess of Par Value, Common Stock 24,000 c. Cash 45,000 Accounts Receivable 15,500 Building 82,600 Notes Payable 60,000 Common Stock, $25 Par Value 53,100 Paid-In Capital in Excess of Par Value, Common Stock 30,000 d. Cash 147,000 Common Stock, $25 Par Value 79,000 Paid-In Capital in Excess of Par Value, Common Stock 68,000

Explanation / Answer

(2). Number of shares of common stock;

a. 230000 / 25 = 9200 shares

b. 126000 / 25 = 5040 shares

c. 53100 / 25 = 2124 shares

d. 79000 / 25 = 3160 shares

Thus total number of shares of common stock are outstanding at year-end;

(9200 + 5040 + 2124 + 3160) = 19524 shares

(3). Amount of minimum legal capital;

Number of shares * par value

Number of shares = 19524

Par value = $25

Thus minimum legal capital (19524 * $25) = $488100

(4). Total paid-in capital at year-end;

Total paid-in capital will be as follow;

($230000 + $60000 + $126000 + $24000 + $53100 + $30000 + $79000 + $68000) = $670100

(5). Book value per share;

Formula of book value =

Total common stockholders’ equity / Number of shares outstanding

$797000 / 19524

= $40.82 per share

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