Question

When Resistol systems Inc. was formed the company was authorized to issue 5000 shares of $100 per value 8% cumulate preferred stock and 100,000 shares of two dollar stated value stock half of the preferred stock was issued at a price of $103 per share and 58,000 shares of the comments that were sold for $12 per share at the end of the current year Resistol have retained earnings of $382,000 prepare the stockholders equity section of the companies balance sheet at the end of the current year

Answer 1

Equity Section of Resistol Systems Inc. :

Particulars	Amount
Issued Capital and Reserves attributable to Share Holders
i) Issued Capital	$3,66,000
ii) Securities Premium/ Share Premium	$5,87,500
iii) Retained Earnings	$3,82,000
Total Equity	$13,35,500

Working Notes :

Computation of Authorised Share Capital :

Particulars	Amount
Authorised Share Capital:
i) Preferred Stock ( 5000 shares * $ 100 )	$5,00,000
ii) Shares ( 100000 shares * $ 2 )	$2,00,000
Total Authorised Share Capital	$7,00,000

Computation of Issued Capital and Securities Premium:

Particulars	Face Value (A)	Issue Price (B)	Number Of Shares/Stock (C)	Issued Capital (C)*(A)	Securities Premium (C)(B-A)
Preferred Stock	$100	$103	2500	$2,50,000	$7,500
Shares	$2	$12	58000	$1,16,000	$5,80,000
				$3,66,000	$5,87,500