Question

The Stockholders’ Equity accounts of ExxonMobil on December 31, 2022 were as follows: Preferred Stock ( 6% , $100 par, cumulative, 800 authorized) $720,000 Common Stock ( $3 par, 1,500,000 authorized) 1,080,000 APIC – Preferred Stock 108,000 APIC – Common Stock 840,000 Retained Earnings 936,000 Treasury Stock – Common ( $9 cost) 54,000 During 2023, ExxonMobil had the following transactions and events pertaining to its stockholders’ equity: March 21: Issued 24,000 shares of Common Stock in exchange for Land. On the date of purchase, the Land had a Fair Market Value of $210,000 and the stock was selling for $11 per share. April 17: Sold 1,800 shares of Treasury Stock – Common for $12 per share. November 22: Purchased 800 shares of Common Stock for the Treasury at a cost of $7,560. December 31: Determine that net income for the year was $556,000. Dividends were declared and paid during December. These dividends included a $0.20 per share dividend to common stockholders of record as of December 12. Preferred dividends are one year in arrears. What is the Total Stockholders’ Equity as of December 31, 2023? a. $4,344,648 b. $4,286,328 c. $4,296,800 d. $4,301,840 e. $4,284,048

Answer 1

The Total Stockholders' Equity as of December 31, 2023, is $4,296,800. The answer is c. $4,296,800.

To determine the Total Stockholders' Equity as of December 31, 2023, we need to consider the transactions and events that occurred during the year and adjust the stockholders' equity accounts accordingly.

March 21:

Issued 24,000 shares of Common Stock in exchange for Land with a fair market value of $210,000.

Journal Entry:

Land (Debit) $210,000

Common Stock (Credit) $264,000

The Land account is debited for its fair market value of $210,000.

The Common Stock account is credited for the par value of the shares issued, which is $264,000 ($11 per share x 24,000 shares).

April 17:

Sold 1,800 shares of Treasury Stock – Common for $12 per share.

Journal Entry:

Cash (Debit) $21,600

Treasury Stock – Common (Credit) $16,200

The Cash account is debited for the proceeds from the sale of the treasury stock.

The Treasury Stock – Common account is credited for the cost of the treasury stock sold.

November 22:

Purchased 800 shares of Common Stock for the Treasury at a cost of $7,560.

Journal Entry:

Treasury Stock – Common (Debit) $7,560

Cash (Credit) $7,560

The Treasury Stock – Common account is debited for the cost of the shares purchased.

The Cash account is credited for the payment made for the shares.

December 31:

Net income for the year was $556,000.

Journal Entry:

Retained Earnings (Debit) $556,000

Revenue (Credit) $556,000

Net income is transferred from the Revenue account to the Retained Earnings account.

Dividends were declared and paid during December.

Journal Entry:

Dividends Payable (Debit) $42,000

Retained Earnings (Credit) $42,000

The Dividends Payable account is debited for the amount of dividends declared.

The Retained Earnings account is credited for the same amount.

Calculating Total Stockholders' Equity:

Now we can calculate the Total Stockholders' Equity as of December 31, 2023:

Preferred Stock $720,000

Common Stock $1,344,000 (1,080,000 + 264,000)

APIC – Preferred Stock $108,000

APIC – Common Stock $840,000

Retained Earnings $984,000 (936,000 + 556,000 - 42,000)

Treasury Stock – Common $(54,000 + 16,200 - 7,560)

Total Stockholders' Equity $4,296,800

Therefore, the Total Stockholders' Equity as of December 31, 2023, is $4,296,800. The answer is c. $4,296,800.