Question

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

	General Journal	Debit	Credit
a.	Cash	300,000
	Common Stock, $25 Par Value		235,000
	Paid-In Capital in Excess of Par Value, Common Stock		65,000
b.	Organization Expenses	160,000
	Common Stock, $25 Par Value		129,000
	Paid-In Capital in Excess of Par Value, Common Stock		31,000
c.	Cash	44,500
	Accounts Receivable	19,500
	Building	81,800
	Notes Payable		59,900
	Common Stock, $25 Par Value		55,900
	Paid-In Capital in Excess of Par Value, Common Stock		30,000
d.	Cash	129,000
	Common Stock, $25 Par Value		79,000
	Paid-In Capital in Excess of Par Value, Common Stock		50,000

Required:
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $798,000?

Answer 1

2) Total share capital at year end will be equal to the balance in common stock account at year end which is calculated as follows:-

Common Stock = $235,000+$129,000+$55,900+$79,000

= $498,900

Common shares outstanding at year end = Common Stock/par Value

= $498,900/$25 per share = 19,956 shares

Therefore the number of shares outstanding at year end is 19,956 shares.

3) The amount of minimum legal capital will be equal to total amount of common stock outstanding at year (i.e. at par value) (which is $498,900).

4) Total Paid in capital = Common Stock+Paid in capital in excess of par

Total paid in capital in excess of par = $65,000+$31,000+$30,000+$50,000

= $176,000

Total paid in capital = $498,900+$176,000 = $674,900

5) Book Value per share = Total paid in capital plus retained earnings/No. of shares

= $798,000/19,956 shares = $39.99 per share or $40 per share