Question

Dirk Company reported the following balances at December 31, 2016: common stock $391,000, paid-in capital in excess of par value—common stock $109,000, and retained earnings $242,000. During 2017, the following transactions affected stockholders' equity.

1.		Issued preferred stock with a par value of $122,000 for $204,000.
2.		Purchased treasury stock (common) for $39,000.
3.		Earned net income of $143,500.
4.		Declared and paid cash dividends of $51,000.

Prepare the stockholders’ equity section of Dirk Company’s December 31, 2017, balance sheet.

Answer 1

• Requirement asked

Balance Sheet - Partial
at 31 Dec 2017
Paid in Capital
Capital Stock:
Preferred Stock	$122,000
Common Stock	$391,000
Total capital stock		$513,000
Additional paid in capital:
Paid in Capital in excess of par - Preferred Stock	$82,000
Paid in Capital in excess of par - Common Stock	$109,000
Total additional capital		$191,000
Total Paid in Capital		$704,000
Retained earnings		$334,500
Total paid in capital & Retained earnings		$1,038,500
Less: Treasury Stock		$39,000
Total Stockholder's equity		$999,500

--Working

Balance Sheet - Partial
at 31 Dec 2017
Paid in Capital
Capital Stock:
Preferred Stock	122000
Common Stock	391000
Total capital stock		=122000+391000
Additional paid in capital:
Paid in Capital in excess of par - Preferred Stock	=204000-122000
Paid in Capital in excess of par - Common Stock	109000
Total additional capital		=82000+109000
Total Paid in Capital		=513000+191000
Retained earnings		=242000+143500-51000
Total paid in capital & Retained earnings		=704000+334500
Less: Treasury Stock		39000
Total Stockholder's equity		=1038500-39000