Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.
  

March 1 Issues 60,000 additional shares of $1 par value common stock for $57 per share.

May 10 Repurchases 5,500 shares of treasury stock for $60 per share.

June 1 Declares a cash dividend of $1.75 per share to all stockholders of record on June 15. (Hint:  Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Reissues 2,750 shares of treasury stock purchased on May 10 for $65 per share.
  

Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $5,000,000; and Retained Earnings, $2,500,000. Net income for the year ended December 31, 2018, is $650,000.
  

Required:

Prepare the statement of stockholders’ equity for Power Drive Corporation for the year ended December 31, 2018.

Answer 1

Statement of Stockholders' Equity
For the Year Ended December 31, 2018
	Common Stock	Additional Paid ­in Capital	Retained Earnings	Treasury Stock	Total Stockholders' Equity
Balance, January 1	100000	5000000	2500000		7600000
Issued common stock	60000	3360000			3420000
Purchase treasury stock				-330000	-330000
Cash dividends			-270375		-270375
Sale of treasury stock		13750		165000	178750
Net income			650000		650000
Balance, December 31	160000	8373750	2879625	-165000	11248375
Cash dividends	=(100000+60000-5500)*1.75