Q25E_2 - Horngren'S Financial And Managerial Accounting

Question

Journalizing treasury stock transactions and reporting stockholders’ equity

Southern Amusements Corporation had the following stockholders’ equity on 

November 30:

Paid-In Capital:

Common Stock—\(5 Par Value; 1,300 sharesauthorized, 250 shares issued and outstanding1,250

Retained Earnings50,000

Total Stockholders’ Equity \) 55,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 3,750

Total Paid-In Capital

\(5,000

On December 30, Southern purchased 200 shares of treasury stock at \)15 per share.

Requirements

2. Prepare the stockholders’ equity section of the balance sheet at December 31, 2018. Assume the balance in retained earnings is unchanged from November 30.

Step-by-Step Solution

Answer

Total Stockholders’ Equity at December,2018 is $52,000

Step 1: Basic Introduction-

Stockholders’ Equity is the amount of capital invested by the owner of the corporation either in the form of cash, assets or profit of the preceding financial year.

Step 2: Partial Balance sheet-

Stockholder’s equity                                                December 31,2018
Common Stock—$5 Par Value; 1,300 shares authorized, 250 shares issued and outstanding	$1,250
Add: Paid-In Capital in Excess of Par—Common	$3,750
Add: Retained Earnings	$50,000
	$55,000
Less: Treasury Stock	($3,000)
Total Stockholders’ Equity	$52,000