Question

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Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp.

Great Adventures has authorized $1 par value common stock. When the company began on July 1, 2021, Tony and Suzie each purchased 10,000 shares (20,000 shares total) of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during the remainder of 2022:

November	5		Issue an additional 128,000 shares of common stock for $10 per share.
November	16		Purchase 12,800 shares of its own common stock (i.e., treasury stock) for $29 per share.
November	24		Resell 6,800 shares of treasury stock at $30 per share.
December	1		Declare a cash dividend on its common stock of $14,760 ($0.10 per share) to all stockholders of record on December 15.
December	20		Pay the cash dividend declared on December 1.
December	31		Pay $870,000 for construction of new cabins and other facilities. The entire expenditure is recorded in the Buildings account.

2. Great Adventures has net income of $40,604 in 2022. Retained earnings at the beginning of 2022 was $34,850. Prepare the stockholders’ equity section of the balance sheet for Great Adventures as of December 31, 2022. (Amounts to be deducted should be indicated with a minus sign.)

	GREAT ADVENTURES, INC. Balance Sheet (Stockholders' Equity Section) December 31, 2022 Stockholders' equity: Common Stock $148,000 Additional Paid-In Capital Total paid-in capital 148,000 Retained Earnings Treasury Stock Total stockholders' equity $148,000

Answer 1

Great Adventure Inc.
Balance sheet
(Stockholder's Equity Section)
At December 31, 2022
Stockholder's Equity:
Common stock	$                1,48,000
Additional Paid - in - Capital	$             11,58,800
Total Paid - in Capital	$             13,06,800
Retained earnings	$                   60,694
Treasury Stock	$              -1,74,000
Total Stockholder's Equity	$             11,93,494
Workings:
Paid in capital in excess of par value, Common stock (128000 X $9)	$             11,52,000
Paid in capital in from sale of treasury stock [6800 X ($30-$29)]	$                      6,800
Additional Paid - in - Capital	$             11,58,800
Dividend declared	$                   14,760
Treasury Stock [(12800-6800)*29]	$                1,74,000
	Beginning balance	Addition	Deduction	Ending balance
Common stock	$                   20,000	$          1,28,000		$           1,48,000
Additional Paid - in - Capital	$                             -	$       11,58,800		$         11,58,800
Retained earnings	$                   34,850	$             40,604	$             14,760	$               60,694