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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Stockholders' Equity section of balance sheet
Premium Imports Inc. retails rating pmdiuts for BMW's. Porsches, and Ferraris. The following accounts and (heir balances appear in the ledger of Premium Imports Inc. on November 30. the end of the current year


Forty thousand shares of preferred and 500.000 shares of common stock are authorized. There are 62.000 shares of common stock held as treasury stock.
Prepare the Stockholders' Equity section of the balance sheet as of November 30.

To determine

Concept Introduction:

Stocks (Common Stock and Preferred Stock):

There are two types of the share capital of a company. Common Stock represents the Common shares issued to the shareholders and preferred stock represents the preference shares issued. Preference shares are given preference in payment of dividends and repayment of capital. Common shareholders get the inbuilt right to vote in decisions of the company and preference shareholders generally do not get this right but they may get voting rights with special provisions.

To Prepare:

The Stockholder's equity section of the balance sheet

Explanation

The Stockholder's equity section of the balance sheet is prepared as follows:

    Stockholder's Equity Section of the balance Sheet:
    Common Stock, $8 par $ 3,200,000
    Paid in Capital in excess of Par-Common Stock $700,000 $ 3,900,000
    Preferred Stock $ 2,080,000

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