Question

Dubai International Paints and Chemicals Limited is a multinational company that provides services in and around South Asian Countries. The following information is available about Dubai International Paints and Chemicals Limited at the beginning of the year:

Common Stock (Authorized 20,000,000 common shares, par AED 5, issued 4,000,000)	AED 20,000,000
Paid in Capital in Excess of par - Common Stock	AED 56,000,000
Preferred Stock (authorized 300,000 shares, par AED 20, issued 200,000)	AED 4,000,000
Paid in Capital in Excess of par - Preferred	AED 200,000

Activities during the year:

1. Issued 50,000 preferred shares and received AED 1,100,000 cash.
2. Issued 80,000 common shares and received AED 1,600,000.
3. Purchased 6,000 shares of common stock for AED 120,000 for treasury.
4. Retained Earnings at the end of the year was AED 4,000,000.

You are required to prepare the equity section of balance sheet at the end of the year.

Answer 1

The equity section of balance sheet at the end of the year:

1.Stockholder's Equity

2.Paid in Capital:

3.Preferred Stock    $50,00,000

4.Common Stock   $ 2,04,00,000

5.Total capital stock (3+4) $2,54,00,000

6.Additional paid-in capital:

7.In excess of par- preferred stock $3,00,000

8.In excess of par- common stock $ 5,72,00,000

9.Total additional paid in capital (7+8)    $ 5,75,00,000

10.Total paid in capital (5+9) $ 8,29,00,000

11.Retained earnings $ 40,00,000

12.Total additional paid in capital and Retained earnings (10+11)    $ 8,69,00,000

13.Less:Treasury stock ($ 1,20,000)

14.Total stockholder's equity (12-13) $ 8,67,80,000

Explanation:

Preferred Stock:

1.Previously issued (200000 x $ 20) $ 40,00,000

2.Current Issued (50000 x $ 20) $ 10,00,000

3.Total paid in capital (1+2) $ 50,00,000

4.PIC in excess of par      $ 3,00,000

{($ 1100000 - ($ 50000*20)}+200000

5.Total preferred capital (3+4) $ 53,00,000

Common Stock:

1.Previously issued (4000000 x $ 5) $ 2,00,00,000

2.Current Issued(80000 x $ 5) $ 4,00,000

3.Total paid in capital (1+2) $ 2,04,00,000

4.PIC in excess of par             $ 5,72,00,000

{($1600000 - (80000*5)}+560,00,000

5.Total common capital (3+4)     $ 7,76,00,000

--------HOPE THIS IS HELPFUL