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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Reporting paid-in capital

The following accounts and their balances were selected from the unadjusted trial balance of Point Lama Group Inc., a freight forwarder, at October 31, the end of the current fiscal year:

Common Stock, no par, $14 stated value $ 4,480,000
Paid In Capital from Sale of Treasury Stock 45.000
Paid In Capital in Excess of Par—Preferred Stock................... 210,000
Paid In Capital in Excess of Stated Value—Common Stock 48,000
Preferred 2% Stock, $120 par 3,400,000
Retained Earrings 39,500,000

Prepare the Paid-In Capital portion of the stockholders’ equity section of the balance sheet using Method 1 of Exhibit 8. There are 375,000 shares of common stock authorized and 85,000 shares of preferred stock authorized.

To determine

Stockholders’ Equity Section: It is refers to the section of the balance sheet that shows the available balance of stockholders’ equity as on reported date at the end of the financial year.

To prepare: The paid-in capital portion of the stockholders’ equity section of the balance sheet.

Explanation

Prepare the paid-in capital portion of the stockholders’ equity section of the balance sheet.

Incorporation PLG
At the end of fiscal year October 31
Stockholders’ equity section (Partial balance sheet)
Particulars Amount ($) Amount ($) Amount ($)
Paid-in Capital:

     Preferred 2% Stock, $120 par (85,000

     shares authorized, 70,000 shares issued)

$8,400,000    
     Excess over par $210,000  
         Paid in capital, preferred stock $8,610,000  

     Common Stock, no par, $14 stated value

     (375,000 shares authorized, 320,000

     shares issued)

$4,480,000

   
     Excess over par $480,000  
         Paid in capital, common stock $4,960,000  
     From sale of treasury stock   $45,000
         Total paid-in capital $13,615,000

Table (1)

Description:

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