Question

Common stock has been issued for 6,000,000. This represented 400,000 shares of stock at a stated value of $5 per share. Fifty thousand shares are in the treasury. These 50,000 shares were acquired for $25 per share. The total undistributed net income since the origin of the corporation was 3,750,000 as of Dec 31, 2004. Ten-thousand of the treasury stock shares were sold in Jan 2005 for $30 per share. What is the total stockholders equity that should have been show on the balance sheet as of 12/31/04. The retained earning as of 12/31/05 will be __________

Answer 1

Common stock ( 400000 * 5 )	2000000
Paid in capital in excess of par - Common stock [ 6000000 - 2000000 ]	4000000
Retained earnings	3750000
(-) Treasury stock [ 50000 * 25 ]	1250000
Total stockholders' equity as of 12/31/04	8500000
Common stock ( 400000 * 5 )	2000000
Paid in capital in excess of par - Common stock [ 6000000 - 2000000 ]	4000000
Paid in capital from treasury stock [ 10000 * ( 30 - 25 ) ]	50000
Retained earnings	3750000
(-) Treasury stock [ ( 50000 - 10000 ) * 25 ]	1000000
Total stockholders' equity as of 12/31/05	8800000