ower Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021. March 1 Issues 52,000 additional shares of $1 par value common stock for $49 per share. May 10 Purchases 4,700 shares of treasury stock for $52 per share. June 1 Declares a cash dividend of $1.35 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) July 1 Pays the cash dividend declared on June 1. October 21 Resells 2,350 shares of treasury stock purchased on May 10 for $57 per share. Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-in Capital, $4,200,000; and Retained Earnings, $1,700,000. Net income for the year ended December 31, 2021, is $570,000. Required: Prepare the stockholders' equity section of the balance sheet for Power Drive Corporation as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Answer and Explanation:

The preparation of the statement of stockholder equity is presented below:

                                                 Power Drive Corporation    

                                                       Balance sheet  

                                      (Stockholder's Equity Section)    

                                                  At December 31, 2021  

Stockholder's Equity:    

Common stock                               $1,52,000    

Additional Paid - in - Capital          $67,07,750    

Total Paid - in Capital                      $68,59,750    

Retained earnings                          $20,71,145    

Treasury Stock                          -$1,22,200    

Total Stockholder's Equity             $88,08,695  

Workings note    

Paid in capital in excess of par value, Common stock  $24,96,000  

                                                                                       (52000 × $48)  

Paid in capital in from sale of treasury stock                 $11,750  

                                                                                      [2350 × ($57-$52)]  

Total Additional Paid - in - Capital                                 $25,07,750    Now

Dividend declared [(152000 - 4700) × $1.35]         $1,98,855    

Treasury Stock [(4700 - 2350) × $52]                     $1,22,200  

Particulars            Beg. Balance    Additions     Deductions   End. Bal

Common stock    $100,000            $52,000                             $152,000

Additional Paid -  $42,00,000       $25,07,750                       $67,07,750

in - Capital

Retained earnings $1,700,000     $570,000     $1,98,855       $20,71,145

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

if you are driving in the far left hand lane and someone would like to pass you, move over to the right lane when it is safe to do so and allow them to pass.

you must always yield to pedestrians.

come to a complete stop whenever you see pedestrians trying to cross the street.

never pass a school bus if it has flashing red lights. wait until the lights have stopped.

be aware of bicyclists. often they share the road with cars and are supposed to also follow general traffic laws.

be particularly careful about driving in cities with bike lanes -- always check before turning that a bike is not coming.

it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation: