in draco corporations first year of business, the following transactions affected its equity accounts.\n•…

in draco corporations first year of business, the following transactions affected its equity accounts.\n• issued 7,000 shares of $2 par value common stock for $48. it authorized 20,000 shares.\n• issued 1,750 shares of 12%, $10 par value preferred stock for $53. it authorized 3,000 shares.\n• reacquired 350 shares of common stock for $60 each.\n• retained earnings is impacted by reported net income of $80,000 and cash dividends of $30,000.\nprepare the stockholders equity section of dracos balance sheet as of december 31.\nnote: amounts to be deducted should be indicated by a minus sign.\ndraco corporation\nstockholders equity section of the balance sheet\ndecember 31\ntotal stockholders equity

in draco corporations first year of business, the following transactions affected its equity accounts.\n• issued 7,000 shares of $2 par value common stock for $48. it authorized 20,000 shares.\n• issued 1,750 shares of 12%, $10 par value preferred stock for $53. it authorized 3,000 shares.\n• reacquired 350 shares of common stock for $60 each.\n• retained earnings is impacted by reported net income of $80,000 and cash dividends of $30,000.\nprepare the stockholders equity section of dracos balance sheet as of december 31.\nnote: amounts to be deducted should be indicated by a minus sign.\ndraco corporation\nstockholders equity section of the balance sheet\ndecember 31\ntotal stockholders equity

Answer

Explanation:

Step1: Calculate common stock

Common stock = Number of shares × Par value Common stock = (7000\times2=$14000)

Step2: Calculate paid - in capital in excess of par - common

Paid - in capital in excess of par - common=(Issue price - Par value)×Number of shares ((48 - 2)\times7000=46\times7000=$322000)

Step3: Calculate preferred stock

Preferred stock = Number of shares × Par value Preferred stock=(1750\times10=$17500)

Step4: Calculate paid - in capital in excess of par - preferred

Paid - in capital in excess of par - preferred=(Issue price - Par value)×Number of shares ((53 - 10)\times1750 = 43\times1750=$75250)

Step5: Calculate treasury stock

Treasury stock = Number of shares × Cost per share Treasury stock=(350\times60=$21000)

Step6: Calculate retained earnings

Retained earnings=Net income - Cash dividends Retained earnings=(80000 - 30000=$50000)

Answer:

Stockholders' Equity Section of the Balance Sheet Amount
Common stock ((7000) shares at ($2) par) ($14000)
Paid - in capital in excess of par - common ($322000)
Preferred stock ((1750) shares at ($10) par) ($17500)
Paid - in capital in excess of par - preferred ($75250)
Retained earnings ($50000)
Less: Treasury stock ((350) shares) (-$21000)
Total stockholders' equity ($457750)