Question

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

	General Journal	Debit	Credit
a.	Cash	300,000
	Common Stock, $25 Par Value		250,000
	Paid-In Capital in Excess of Par Value, Common Stock		50,000
b.	Organization Expenses	180,000
	Common Stock, $25 Par Value		127,000
	Paid-In Capital in Excess of Par Value, Common Stock		53,000
c.	Cash	43,000
	Accounts Receivable	18,000
	Building	82,700
	Notes Payable		59,600
	Common Stock, $25 Par Value		54,100
	Paid-In Capital in Excess of Par Value, Common Stock		30,000
d.	Cash	124,000
	Common Stock, $25 Par Value		80,000
	Paid-In Capital in Excess of Par Value, Common Stock		44,000

Required:
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $786,000?

Answer 1

Solution 2:

Outstanding Shares of Common stock = Total Common Stock/ Par Value = ($250,000 + $127,000+ $54,100+$80,000)/ $25

= $511,100/ $25

= 20,444

Solution 3:

Minimum Legal Capital = Par value of Common Stock = $250,000 + $127,000+ $54,100+$80,000 = $511,100

Solution 4:

Total Paid in capital = Par value of Common stock + Paid in capital in excess of Par value

= $511,100 + ($50,000 +$53,000+$30,000+$44,000)

= $511,100 + $177,000

= $688,100

Solution 5:

Book Value per share = total paid-in capital plus retained earnings / Outstanding number of shares

= $786,000 / 20,444

= $38.45