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Sosa Company’s stockholders' equity at January 1, 2020 is as follows: Common stock, $10 par; issued...

Sosa Company’s stockholders' equity at January 1, 2020 is as follows:

Common stock, $10 par; issued and outstanding 225,000 shares: $2,250,000

Paid-in capital – excess of par: $900,000

Retained earnings: $2,190,000

During 2020, Sosa had the following stock transactions:

1. Acquired 6,000 shares of its stock for $270,000.

2. Sold 3,600 treasury shares at $50 a share.

3. Sold the remaining treasury shares at $41 per share.

No other stock transactions occurred during 2020. Sosa reported net income of $540,000 and declared dividends of $60,000 for 2020. What is the stockholders’ equity balance at December 31, 2020?

Business   Accounting   
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Answer #1
Per share purchase price 45 =270000/6000
Additional paid in Capital from sale at $50 a share 18000 =3600*(50-45)
Additional paid in Capital decrease from sale at $41 a share 9600 =2400*(45-41)
Net Additional paid in Capital increase 8400
Common Stock 2250000
Paid-in capital – excess of par 900000
Paid in Capital from Treasury Stock 8400
Retained earnings 2670000 =2190000+540000-60000
Stockholders’ equity balance at December 31, 2020 5828400
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