Carl Corporation has the following beginning balances in its stockholders’ equity accounts on January 1: Common...

Carl Corporation has the following beginning balances in its stockholders’ equity accounts on January 1: Common Stock ($1 Par), $15,000; Additional Paid-in Capital, $675,000; and Retained Earnings, $200,000.

Carl has the following transactions affecting stockholders’ equity in the year.

March 1 Issues 6,000 additional shares of $1 par value common stock for $50 per share.

May 10 Repurchases 1,000 shares of treasury stock for $58 per share.

June 21 Reissues 500 shares of treasury stock purchased on May 10 for $62 per share.

July 1 Declares a cash dividend of $0.50 per share to all stockholders.

October 1 Pays the cash dividend declared on July 1.

Net income for the year ended December 31 is $50,000.

Write journal entries for each equity transaction.

Prepare a statement of stockholder equity.

The stockholders’ equity section of Velcro World is presented here.

VELCRO WORLD Balance Sheet (partial)
($ and shares in thousands)
Stockholders’ equity:
Preferred stock, $1 par value	$ 6,000
Common stock, $1 par value	30,000
Additional paid-in capital	1,164,000
Total paid-in capital	1,200,000
Retained earnings	288,000
Treasury stock, 11,000 common shares	(352,000)
Total stockholders’ equity	$1,136,000

1.	How many shares of preferred stock have been issued?
2.	How many shares of common stock have been issued?
3.	If the common shares were issued at $30 per share, at what average price per share were the preferred shares issued?
4.	If retained earnings at the beginning of the period was $250 million and $30 million was paid in dividends during the year, what was the net income for the year?

Expert Solution

Journal Entries
Date	Particualrs	Debit	Credit	Calcualtions for your reference
March, 1	Cash	300000		(6000*50)
	Common stock		6000	(6000*1)
	Additional paid in capital on common stock		294000	(6000*49)
	( to book issue of additionila shares)

March, 10	Treasury Stock	58000
	Cash		58000
	( to book purchase of treasury stocl)

June, 21	Cash	31000		500*62
	Additional paid in on treasury stock		2000	500*4
	Treasury stock		29000	500*58
	( to book reissue of treasury stock)

July, 1	Retained earnings	10500		(15000+6000)0.5
	Dividend Payable		10500
	( to book dividend declared)

October, 1	Dividend Payable	10500
	Cash		10500
	( to book payment)


	Shareholders Equity
	Paid in capital
	Common stock, $ 1 par,
	Shares outstanding (21000)		21000	(15000+6000)

	Paid in capita excess of par - common		733000	(675000+58000)
	Paid in excess - Treasury stock		2000

	Total paid in capital		756000

	Retained earnings	200000
	Less: Dividend paid	10500	189500

Less	500 Treasury stock		29000	(500*58)

	Total		916500

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