Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018. March 1 Issues 59,000 additional shares of $1 par value common stock for $56 per share. May 10 Repurchases 5,400 shares of treasury stock for $59 per share. June 1 Declares a cash dividend of $1.70 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) July 1 Pays the cash dividend declared on June 1. October 21 Reissues 2,700 shares of treasury stock purchased on May 10 for $64 per share. Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $4,900,000; and Retained Earnings, $2,400,000. Net income for the year ended December 31, 2018, is $640,000. Required: Prepare the statement of stockholders’ equity for Power Drive Corporation for the year ended December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

POWER DRIVE CORPORATION

Statement of Stockholders' Equity

For the Year Ended December 31, 2018

Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity Balance, January 1 - $100,000 $4,900,000 $2,400,000 $0 $7,400,000

Issued common stock

Purchase treasury stock

Dividends

Sale of treasury stock

Net income

Balance, December 31 - $100,000 4,900,000 2,400,0000 $7,400,000

Answer 1

	POWER DRIVE CORPORATION
	Statement of Stockholders' Equity
	For the Year Ended December 31, 2018
	Common Stock	Additional Paid­in Capital	Retained Earnings	Treasury Stock	Total Stockholders'Equity
Balance, January 1	100000	4900000	2400000	0	7400000
Issued common stock	59000	3245000			3304000
Purchase treasury stock				(318600)	-318600
Cash dividends			(261120)		-261120
Sale of treasury stock		13500		159300	172800
Net income			640000		640000
Balance, December 31	159000	8158500	2778880	(159300)	10937080
Workings:
Cash dividends=(159000-5400)*1.7=$261120
Paid in capital-Sale of treasury stock=2700*(64-59)=$13500