Question

The following stockholders’ equity accounts, arranged alphabetically, are in the ledger of Sarasota Corp. at December 31, 2022.

Common Stock ($2 stated value) $2,400,000
Paid-in Capital in Excess of Par Value—Preferred Stock 67,500
Paid-in Capital in Excess of Stated Value—Common Stock 1,575,000
Preferred Stock (5%, $100 par, noncumulative) 900,000
Retained Earnings 2,001,000
Treasury Stock (18,000 common shares) 108,000

Prepare the stockholders’ equity section of the balance sheet at December 31, 2022.

Answer 1

Answer and Explanation:

The preparation of the stockholder equity section of the balance sheet is presented below:

                                                Stockholders' equity  

Paid in capital  

Capital stock  

5% preferred stock, $100 par value, noncumulative, 9,000 shares are issued and outstanding $900,000

Common stock, no par, $2 stated value, $2,400,000

Total capital stock  $3,300,000 (A)

Additional paid in capital  

Paid-in Capital in Excess of Par Value $67,500

Paid-in Capital in Excess of Stated Value - Common Stock  $1,575,000

Total additional paid in capital  $1,642,500 (B)

Total paid in capital  $4,942,500 (A + B)

Add: Retained earnings  $ 2,001,000

Total paid in capital and retained earnings  $6,943,000

Less: Treasury stock (18,000 common shares)  $(108,000)

Total stockholders' equity  $6,835,500

Answer 2

• The preparation of the stockholder equity section for the balance sheet is as follows:  

                                               Stockholders' equity  

Paid in capital  

Capital stock  

5% preferred stock, $100 par value, noncumulative, 9,000 shares are issued and outstanding $900,000

Common stock, no par, $2 stated value, $2,400,000

Total capital stock  $3,300,000 (A)

Additional paid-in capital  

Paid-in Capital - in Excess of Par Value $67,500

Paid-in Capital in Excess of Stated Value - Common Stock  $1,575,000

Total additional paid in capital  $1,642,500 (B)

Total paid in capital  $4,942,500 (A + B)

Add: Retained earnings  $ 2,001,000

Total paid in capital & retained earnings  $6,943,000

Less: Treasury stock (18,000 common shares)  $(108,000)

Total stockholders' equity  $6,835,500

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