Question

On January 1, 2014, GOT Company had Common Stock of 800,000 authorized shares with P20 par value. The Stockholders' Equity accounts on January 1, 2014 had the following balances:

Common Stock - P2,000,000
Additional Paid-in Capital - P600,000 Retained Earnings - P1,200,000
Transactions during the year and other information relating to shareholders' equity accounts were:
1. On January 5, GOT issued at P54 per share, 10,000 preferred stock with P50 par value and 9% cumulative. GOT had 400,000 authorized preferred shares.
2. On February 1, GOT reacquired 10,000 common shares at P32 per share.
3. On April 30, GOT sold 25,000 common stock at P34 per share. 4. On June 18, GOT declared a cash dividend of P2 per common stock, payable on July 12, to shareholders of record on July 1.
5. On November 19, GOT sold 5,000 shares of treasury for P42 per share.
6. On December 15, GOT declared a yearly cash dividend on preferred stock, payable on January 14, 2015 on shareholders of record on December 31, 2014.
7. Net income for the year was P800,000
8. GOT appropriated earnings equal to the cost of treasury shares.
Determine the balances of the following accounts on December 31, 2014.
a.) Preferred Stock
b.) Common Stock
c.) Additional Paid-in Capital

Answer 1

To calculate the net profit from stock transactions, subtract the purchase price and transaction costs from the current price, then multiply by the number of shares. For the given examples, the net profits for Nike, Panda Express, and Wal Mart are $15,240.01, $7,780.00, and $27,726.01 respectively.

Step-by-step explanation:

To calculate the net profit from each stock transaction, we need to know the initial purchase price, the selling price, and any associated transaction costs.

1. For Nike: Net Profit = (Current Price - Purchase Price) × Number of Shares - Transaction Costs. So, Net Profit = ($39.75 - $24.50) × 1000 - $9.99 = $15,240.01
2. For Panda Express: Net Profit = (Current Price - Purchase Price) × Number of Shares - Transaction Costs. So, Net Profit = ($23.25 - $13.50) × 800 - $10 = $7,780.00
3. For Wal Mart: Net Profit = (Current Price - Purchase Price) × Number of Shares - Transaction Costs. So, Net Profit = ($58.75 - $35.50) × 1200 - $12.99 = $27,726.01

Each of these calculates the capital gain from buying and selling the stock and then subtracts the transaction cost to find the net profit. It is important to remember that these calculations do not account for any capital gains tax that might apply to the profits.