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Q17E.

Expert-verified
Intermediate Accounting (Kieso)
Found in: Page 815

Short Answer

(Stockholders’ Equity Section) Bruno Corporation’s post-closing trial balance at December 31, 2017, is shown as follows.

BRUNO CORPORATION

POST-CLOSING TRIAL BALANCE

DECEMBER 31, 2017

Dr.

Cr.

Accounts payable

$ 310,000

Accounts receivable

$ 480,000

Accumulated depreciation—buildings

185,000

Additional paid-in capital in excess

of par—common

1,300,000

From treasury stock

160,000

Allowance for doubtful accounts

30,000

Bonds payable

300,000

Buildings

1,450,000

Cash

190,000

Common stock ($1 par)

200,000

Dividends payable (preferred stock—cash)

4,000

Inventory

560,000

Land

400,000

Preferred stock ($50 par)

500,000

Prepaid expenses

40,000

Retained earnings

301,000

Treasury stock (common at cost)

170,000

Totals

$3,290,000

$3,290,000

At December 31, 2017, Bruno had the following number of common and preferred shares.

Common

Preferred

Authorized

600,000

60,000

Issued

200,000

10,000

Outstanding

190,000

10,000

The dividends on preferred stock are $4 cumulative. In addition, the preferred stock has a preference in liquidation of $50 per share.

Instructions

Prepare the stockholders’ equity section of Bruno’s balance sheet at December 31, 2017.

Total Stockholders’ Equity section is $2,291,000

See the step by step solution

Step by Step Solution

Meaning of Stockholders’ Equity

Stockholders' equity can be term as the value of the assets owned by investors after deducting their liabilities. In addition to being known as shareholder equity, it is also called the book value of a company.

Preparing the Stockholders’ Equity Section

BRUNO CORPORATION

POST-CLOSING TRIAL BALANCE

DECEMBER 31, 2017

Capital Stock

Preferred stock,$4 cumulative, par value $50

Per-share; authorized 60,000 shares, issued and

Outstanding 10,000 shares

$500,000

Common Stock, par value $1 per share;

Authorized 600,000 shares, issued 200,000

Shares, and outstanding 190,000 shares

200,000

Total Capital Stock

700,000

Additional paid-in capital-

In Excess of par-common

From the sale of treasury stock

1,300,000

160,000

Total paid-in capital

2,160,000

Retained Earnings

301,000

Total paid-in capital and retained earnings

2,461,000

Less: Treasury stock,10,000 shares at cost

170,000

Total stockholders’ Equity

$2,291,000

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