24. Panhandle Corporation was organized on January 3, 2015. The firm was authori

Question

24. Panhandle Corporation was organized on January 3, 2015. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2015 they had the following transactions: a. Issued 30,000 shares of common stock at $7 per share b. Issued 20,000 shares of common stock at $8 per share c. Reported a net income of $100,000 d. Paid dividends of $50,000. Calculate the following A. Dollar amount in Common Stock B. Dollar amount in Additional Paid in Capital C. Dollar amount in Retained Earnings

Explanation / Answer

A. Dollar amount in Common Stock

Issue 30,000 shares (30,000 X $5) = $150,000
Issue 20,000 shares (20,000 X $5) = $100,000
Common Stock =$250,000

B. Dollar amount in Additional Paid in Capital

Issue 30,000 shares {30,000 X ($7 - $5)} = $60,000
Issue 20,000 shares {20,000 X ($8 - $5)} = $60,000
Additional Paid in Capital =$120,000

C. Dollar amount in Retained Earnings

Net Income = $100,000
Less: Dividends paid = $50,000
  Retained Earnings = $50,000

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