Question

Equity section of Sol Corporation shows the following on January 1, 2018. Shares Ordinary – Ordinary,...

Equity section of Sol Corporation shows the following on January 1, 2018.

Shares Ordinary – Ordinary, $1 par value 1,000,000 shares authorized,
500,000 shares issued and outstanding $500,000

Shares premium – Ordinary 500,000

Retained earnings 1,750,000
   
Total Equity       $ 2,750,000

During the year, the company had following transactions occurred:
Mar. 1 Issued 50,000 ordinary shares for $150,000.
Jun. 1 Acquired 5,000 shares of its shares for the treasury at $4 per share
Sep. 1 Sold 3,000 shares at $5 per share
Dec 1 Declared a cash dividend of $2 per share to shareholders of record on Dec 15.
Dec 30 Paid cash dividend.

Instructions


Q2) Company had net income of $120,000 in 2018.   Please prepare the equity section of balance sheet as of December 31, 2018.

Business   Accounting   
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Answer #1

Solution:

Sol Corporation
Balance Sheet - Stockholder's Equity Section
31-Dec-18
Particulars Amount
Stockholders Equity:
Share Ordinary $1 par, 1000000 shares authorized, 550000 shares Issued and outstanding $550,000.00
Share Premium - Ordinary $600,000.00
Paid in capital from treasury stock (3000*$1) $3,000.00
Total Contributed Capital $1,153,000.00
Retained Earnings ($1,750,000 + $120,000 - 548000*$2) $774,000.00
Less: Treasury stock -$8,000.00
Total Stockholder's Equity $766,000.00
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