Question

Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet using Method 1 of

Exhibit 8

. Refer to the lists of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

One hundred thousand shares of common stock are authorized, and 5,000 shares have been reacquired.

Common Stock, $2 par	$ 150,000
Paid-In Capital from Sale of Treasury Stock	60,000
Paid-In Capital in Excess of Par—Common Stock	2,250,000
Retained Earnings	10,880,000
Treasury Stock	140,000

Answer 1

Solution:

Balance Sheet (Partial)
Stockholders' Equity:
Paid In Capital:
Common Stcok, $2 Par (100,000 shares authorized, 75,000 shares issued and 70,000 shares outstanding)	$1,50,000
Paid in capital in excess of Par- Common stock	$22,50,000
Paid in capital from sale of Treasury stock	$60,000
Total paid in Capital		$24,60,000
Add: Retained earnings (318000+135000-1760-1440)		$1,08,80,000
Subtotal		$1,33,40,000
Less: Treasury stock (5000 shares)		-$1,40,000
Total Stock holders Equity		$1,32,00,000