The following stockholders' equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011.
Common Stock ($10 stated value)
$1,500,000
Paid-in Capital from Treasury Stock
6,000
Paid-in Capital in Excess of Stated Value-Common Stock
690,000
Paid-in Capital in Excess of Par Value-Preferred Stock
288,400
Preferred Stock (8%, $100 par, noncumulative)
400,000
Retained Earnings
776,000
Treasury Stock-Common (8,000 shares)
88,000
Complete the stockholders' equity section at December 31, 2011.
To complete the stockholders' equity section at December 31, 2011, we need to determine the balances for each equity account.
1. Common Stock ($10 stated value): The balance is given as $1,500,000. No additional information or transactions related to the common stock is provided, so we can leave this account as it is.
2. Paid-in Capital from Treasury Stock: The balance is given as $6,000. This account represents the amount of capital contributed by the sale of treasury stock. No additional information or transactions related to this account is provided, so we can leave this account as it is.
3. Paid-in Capital in Excess of Stated Value-Common Stock: The balance is given as $690,000. This account represents the excess amount received over the stated value of the common stock. No additional information or transactions related to this account is provided, so we can leave this account as it is.
4. Paid-in Capital in Excess of Par Value-Preferred Stock: The balance is given as $288,400. This account represents the excess amount received over the par value of the preferred stock. No additional information or transactions related to this account is provided, so we can leave this account as it is.
5. Preferred Stock (8%, $100 par, noncumulative): The par value is given as $100 and the amount of preferred stock issued is given as $400,000. Since the preferred stock is noncumulative, we do not need to adjust for any dividends in arrears. Therefore, we can leave this account as it is.
6. Retained Earnings: The balance is given as $776,000. Retained earnings represent the accumulated profits or losses of the company. No additional information or transactions related to this account is provided, so we can leave this account as it is.
7. Treasury Stock-Common: The balance is given as 8,000 shares with a value of $88,000. Treasury stock represents shares of the company's own stock that have been repurchased. To calculate the cost per share, we divide the total value ($88,000) by the number of shares (8,000).
Cost per share = $88,000 / 8,000 = $11
Now, we can deduct the cost of treasury stock from the common stock to determine the remaining balance for common stock.
Common Stock = Common Stock - (Cost per share * Treasury Stock)
Common Stock = $1,500,000 - ($11 * 8,000) = $1,412,000
Finally, we can summarize the stockholders' equity section:
Common Stock ($10 stated value): $1,412,000
Paid-in Capital from Treasury Stock: $6,000
Paid-in Capital in Excess of Stated Value-Common Stock: $690,000
Paid-in Capital in Excess of Par Value-Preferred Stock: $288,400
Preferred Stock (8%, $100 par, noncumulative): $400,000
Retained Earnings: $776,000
Treasury Stock-Common: $88,000