McKenny Corporation, whose year end is December 31, lost some of its accounting records in a recent fire on June 25, 20X6. The following information has been salvaged from the rubble.

The preferred stock account has a balance of $225,000 and the par of each share is $50. The common stock has a par of $10 per share and the average issue price of a share of common stock was $13.50. The paid-in capital in excess of par-preferred account has an $11,250 balance. There are 80,000 shares of common stock issued. The retained earnings account had a balance of $152,600 at January 1, 20X6, and a balance of $138,100 at June 25, 20X6.

a) Determine the number of shares of preferred stock issued.
b) What is the balance in the common stock account?
c) What was the average issue price of a share of preferred stock?
d) Determine the balance in the paid-in capital in excess of par-
common account.
e) What is the total paid-in capital?
f) Determine the amount of dividends declared during the period from January 1, 20X6, through June 25, 20X6.

Solution Preview

a) Determine the number of shares of preferred stock issued.

The amount in the preferred stock account will be equal to number of preferred shares issued X the par value of preferred stock. The par value is given as $50 and the total amount in the preferred stock account is 225,000. The number of shares of preferred stock issued is 225,000/50=4,500.

b) What is the balance in the common stock account?

The balance in the common stock account will be Number of shares issued X par value of common stock. The number of shares issued is 80,000 and the par value is $10. The ...

Solution Summary

The solution explains the various calculations relation to equity accounts. The preferred stock accounts are determined.

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