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Q10E.

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Intermediate Accounting (Kieso)
Found in: Page 814

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Short Answer

(Analysis of Equity Data and Equity Section Preparation) For a recent 2-year period, the balance sheet of Santana Dotson Company showed the following stockholders’ equity data on December 31 (in millions).

2017

2016

Additional paid-in capital

$ 931

$ 817

Common stock

545

540

Retained earnings

7,167

5,226

Treasury stock

1,564

918

Total stockholders’ equity

$7,079

$5,665

Common stock shares issued

218

216

Common stock shares authorized

500

500

Treasury stock shares

34

27

Instructions

  1. Answer the following questions
  2. What is the par value of the common stock?
  3. What is the cost per share of treasury stock on December 31, 2017, and on December 31, 2016?
  4. Prepare the stockholders’ equity section on December 31, 2017.

The par value is $2.50, and the total stockholder equity is $7,079. The cost per share of 2017 and 2016 are $46 and $36, respectively.

See the step by step solution

Step by Step Solution

Meaning of stockholders’ Equity

Shareholders’ equity is generally the value of assets that a company has left after meeting its liabilities. The amount can be estimated by subtracting total liabilities from total assets.

Determining par value of the common stock

The par value is $2.50. This amount is obtained from either of the following

Determining Cost per share of Treasury Stock

The cost of the treasury was higher in 2017.

Preparing Stockholders’ Equity section

Stockholders’ Equity (in millions of dollars)

Paid-in Capital

Common Stock, $2.50 par value,500,000 shares

authorized,218,000,000 shares issued, and 184,000,000

shares outstanding

$545

Additional Paid-in Capital

931

Total Paid-in capital

1,476

Retained Earnings

7,167

Total paid-in capital and retained earnings

8,643

Less: Cost of treasury stocks (34,000,000 shares)

1,564

Total stockholders’ Equity

$7,079

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