Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders’ equity in 2018.

March 1 Issues 46,000 additional shares of $1 par value common stock for $43 per share.

May 10 Purchases 4,100 shares of treasury stock for $46 per share.

June 1 Declares a cash dividend of $1.05 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Reissues 2,050 shares of treasury stock purchased on May 10 for $51 per share.

Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $3,600,000; and Retained Earnings, $1,100,000. Net income for the year ended December 31, 2018, is $510,000.

Prepare the stockholders’ equity section of the balance sheet for Power Drive Corporation as of December 31, 2018 and answer the following questions.

a) Determine the amount of common stock to be reported on the December 31 balance sheet.

b) Determine the amount of additional paid-in capital to be reported on the December 31 balance sheet.

c) Determine the amount of total paid-in capital to be reported on the December 31 balance sheet.

d) Determine the amount of total stockholders’ equity to be reported on the December 31 balance sheet.

Answer 1