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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 stockholders' equity

Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet using Method 1 of Exhibit 8. One hundred thousand shares of common stock are authorized, and 5.000 shares have been reacquired.

Common Stock, $2 par $ 150,000
Paid In Capital from Sale of Treasury Stock 60,000
Paid In Capital in Excess of Par—Common Stock 2,250,000
Retained Earnings 10,880,000
Treasury Stock 140,000

To determine

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

To prepare: The stockholders’ equity section of the balance sheet.

Explanation

Prepare the stockholders’ equity section of the balance sheet.

Stockholders’ equity section
Particulars Amount ($) Amount ($) Amount ($)
Paid-in Capital:

     Common Stock, $2 par (100,000 shares

     authorized, 75,000 shares issued)

$150,000    
     Excess over par $2,250,000
         Paid in capital, common stock $2,400,000
     From sale of treasury stock   $60,000
         Total paid-in capital     $2,460,000
Retained earnings $10,880,000
     Total     $13,340,000
Less: Treasury stock (5,000 shares at cost) ($140,000)
Total stockholders’ equity $13,200,000

Table (1)

The Proforma of the reporting the stockholders’ equity section of the partial balance sheet is shown below for better understanding:

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