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 2018. Power Drive has the following transactions affecting stockholders' equity in 2018 March 1 Issues 55,000 additional shares of $1 par value common stock for $52 per share. May 10 Repurchases 5,000 shares of treasury stock for $55 per share June 1 Declares a cash dividend of $1.50 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 2,500 shares of treasury stock purchased on May 10 for $60 per share. Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $4,500,000; and Retained Earnings, $2,000,000. Net income for the year ended December 31, 2018, is $600,000 Required Prepare the statement of stockholders' equity for Power Drive Corporation for the year ended December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.) POWER DRIVE CORPORATION Statement of Stockholders' Equity For the Year Ended December 31, 2018 Total Common Stock Additional Retained Paid-in Capital Earnings Treasury Stock Stockholders Balance, January 1 Issued common stock Purchase treasury stock Dividends Sale of treasury stock Net income Balance, December 31 $100,000$ 4,500,0002,000,000$ 0 S6,600,000 $ 100,000 4,500,000 2.000,000 0 S 6,600,000

Explanation / Answer

Common Stock Additional Paid­in Capital RetainedEarnings Treasury Stock Total Stockholders' Equity Balance, January 1 100000 4500000 2000000 6600000 Issued common stock 55000 2805000 2860000 Purchase treasury stock -275000 -275000 Cash dividends -225000 -225000 Sale of treasury stock 12500 137500 150000 Net income 600000 600000 Balance, December 31 155000 7317500 2375000 -137500 9710000

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