Question

Clothing Emporium was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2018, Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share. Issued 20,000 additional shares of common stock at $8 per share. Issued 300 shares of preferred stock PV-5 at $15 per share Reported a net income of $100,000. Paid dividends of $50,000. Given the above answer the following questions

1. What is the total in the common stock account at 12/31/18
2. What is the ending balance in retained earnings at 12/31/18
3. What is additional paid in capital at 12/31/18
4. What is the total in the preferred stock account at 12/31/18
5. What is total stockholder's equity at 12/31/18?

Answer 1

Answer and Explanation:

The computation is shown below:

1 Total in Common Stock account is

= 20000 shares × $ 7 par

= $140,000

2 Ending balance in retained Earnings is

= Net income - dividends

= $100,000 - $50,000

= $50,000

3 Additional Paid in Capitalis

= (20000 shares × $1) + (300 preferred shares × $10)

= $23,000

4 Total Preferred Stock account is

= 300 shares × $ 5

= $1,500

5 Total Stockholder's Equity is

= $140,000 + $50,000 + $23,000 + $1,500

= $214,500