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 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

March		1		Issues 62,000 additional shares of $1 par value common stock for $59 per share.
May		10		Purchases 5,700 shares of treasury stock for $62 per share.
June		1		Declares a cash dividend of $1.85 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		Resells 2,850 shares of treasury stock purchased on May 10 for $67 per share.

Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-in Capital, $5,200,000; and Retained Earnings, $2,700,000. Net income for the year ended December 31, 2021, is $670,000.

Required:
Prepare the stockholders' equity section of the balance sheet for Power Drive Corporation as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Balance Sheet
Stockholders' Equity Section
December 31,2021
Stockholders' Equity:
Common Stock	162000
Additional Paid ­in Capital	8810250
Total Paid­ in Capital	8972250
Retained Earnings	3080845
Treasury Stock	-176700
Total Stockholders' Equity	11876395
Workings:
Statement of Stockholders' Equity
For the Year Ended December 31, 2021
	Common Stock	Additional Paid ­in Capital	Retained Earnings	Treasury Stock	Total Stockholders' Equity
Balance, January 1	100000	5200000	2700000		8000000
Issued common stock	62000	3596000			3658000
Purchase treasury stock				-353400	-353400
Cash dividends			-289155		-289155
Sale of treasury stock		14250		176700	190950
Net income			670000		670000
Balance, December 31	162000	8810250	3080845	-176700	11876395
Cash dividends	289155	=(100000+62000-5700)*1.85