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Newton Corporation was incorporated on January 2, 2017. It immediately issued 200,000 shares of $10 par...

Newton Corporation was incorporated on January 2, 2017. It immediately issued 200,000 shares of $10 par value common stock at a selling price of $15 each. For the year 2017, Newton had net income of $420,000. Dividends totaling $380,000 were declared and paid.

      On March 5, 2017, Newton purchased 12,000 shares of treasury stock at $12 per share. On December 30, 2017, it sold 8,000 of those shares for $15 per share.

      Prepare the OWNERS’ EQUITY section of the balance sheet at December 31, 2017, computing total owners’ equity.

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Solution:

Stockholder Equity Section of Balance sheet
Newton Corporation at December 31, 2017
Particulars Amount
Stockholders Equity:
Common Stock, $10 Par value, 200000 shares issued and outstanding $2,000,000.00
Additional Paid in Capital - Common $1,000,000.00
Additional Paid in Capital - Treasury Stock (8000*$3) $24,000.00
Treasury Stock (4000*$12) -$48,000.00
Retained Earnings ($420,000 - $380,000) $40,000.00
Total Stockholder's Equity $3,016,000.00
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