Question:
The following is a summary of all relevant transactions of Vicario Corporation since it was organized in
2014. In 2014, 15,000 shares were authorized and 7,000 shares of common stock ($50 par value) were
issued at a price of $57. In 2015, 1,000 shares were issued as a stock dividend when the stock was selling
for $60. Three hundred shares of common stock were bought in 2016 at a cost of $64 per share. These
300 shares are still in the company treasury.
In 2015, 10,000 preferred shares were authorized and the company issued 5,000 of them ($100 par value)
at $113. Some of the preferred stock was reacquired by the company and later reissued for $4,700 more
than it cost the company.
The corporation has earned a total of $610,000 in net income after income taxes and paid out a total of
$312,600 in cash dividends since incorporation.
Instructions
Prepare the stockholders’ equity section of the balance sheet in proper form for Vicario Corporation as of
December 31, 2016. Account for treasury stock using the cost method.
Answer:
VICARIO CORPORATION
Stockholders’ Equity
December 31, 2016
Capital stock:
Preferred stock, $100 par value
10,000 shares authorized, 5,000 shares
issued & outstanding....................................................................................... $ 500,000
Common stock, $50 par value
15,000 shares authorized,
8,000 shares issued 7,700 shares outstanding..................................................... 400,000
Total capital stock.................................................................................. 900,000
Additional paid-in capital:
In excess of par—preferred................................................................................ $65,000
In excess of par—common................................................................................. 59,000*
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From treasury stock—preferred......................................................................... 4,700 128,700
Total paid-in capital............................................................................... 1,028,700
Retained earnings 237,400**
Total paid-in capital and retained earnings......................................................... 1,266,100
Less: Cost of treasury stock
(300 shares—common)...................................................................... 19,200
Total stockholders’ equity...................................................................... $1,246,900
*[($57 – $50) X 7,000 + ($60 – $50) X 1,000]
**$610,000 – $312,600 – ($60 X 1,000 shares)
This study source was downloaded by 100000875505534 from CourseHero.com on 04-08-2025 09:29:07 GMT -05:00
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This study source was downloaded by 100000875505534 from CourseHero.com on 04-08-2025 09:29:07 GMT -05:00
https://www.coursehero.com/file/30202054/9docx/
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