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25 February, 15:59

The Kramer Company was started when it issued 200 shares of $5 par value common stock at a market price of $20 per share. The company repurchased 10 shares at a market price of $15 per share. Later the company reissued 5 shares at a market price of $20 per share. At the end of the first year of operation the companys equity included $1,200 of retained earnings in addition to its contributed capitol. The total amount of stockholder's equity a the end of the first year would be

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  1. 25 February, 18:57
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    Total Equity: 5,200

    Explanation:

    200 share at $5 par value

    common stock $20

    treasury stock

    10 shares at $15

    reissued 5 at $20

    Common stock 1,000 (200 shares at 5)

    Paid in excess of par 3,075 (A)

    retained earnings 1,200

    Treasury Stock ($25) (5 shares at 5)

    Paid - excess of par TS ($50) (5 shares at 15-5 = 5 x 10 = 50)

    Total Equity: 5,200

    (A)

    when issue the shares:

    cash 4000

    cs 1000

    paid in excess of par 3000

    when reissued TS

    cash 100

    treasury stock 25

    paid in excess of par TS 50

    paid in excess of par CS 25
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