26. ABC Corporation's charter authorized 120,000 shares of common stock, par $10. During the first year, 25,000 shares were sold and issued at $18 per share; in addition, 800 shares were subscribed for at the same price. One half of the subscription price was collected during the year. At the end of the first year, reported net income was $22,000 and cash dividends of $6,000 were declared and paid. At year- end, liabilities amounted to $25,000. On the last day of the year, 100 shares of stock were purchased from a disgruntled stockholder at $22 per share (assume the cost method). At year end, what is the total amount of the company's legal capital? SHOW YOUR WORK. 27. ABC Corporation's charter authorized 120,000 shares of common stock, par $10. During the first year, 25,000 shares were sold and issued at $18 per share; in addition, 800 shares were subscribed for at the same price. One half of the subscription price was collected during the year. At the end of the first year, reported net income was $22,000 and cash dividends of $6,000 were declared and paid. At year- end, liabilities amounted to $25,000. On the last day of the year, 100 shares of stock were purchased from a disgruntled stockholder at $22 per share (assume the cost method). At year end, what amount will the company report as treasury stock? SHOW YOUR WORK.
26. ABC Corporation's charter authorized 120,000 shares of common stock, par $10. During the first year, 25,000 shares were sold and issued at $18 per share; in addition, 800 shares were subscribed for at the same price. One half of the subscription price was collected during the year. At the end of the first year, reported net income was $22,000 and cash dividends of $6,000 were declared and paid. At year- end, liabilities amounted to $25,000. On the last day of the year, 100 shares of stock were purchased from a disgruntled stockholder at $22 per share (assume the cost method). At year end, what is the total amount of the company's legal capital? SHOW YOUR WORK. 27. ABC Corporation's charter authorized 120,000 shares of common stock, par $10. During the first year, 25,000 shares were sold and issued at $18 per share; in addition, 800 shares were subscribed for at the same price. One half of the subscription price was collected during the year. At the end of the first year, reported net income was $22,000 and cash dividends of $6,000 were declared and paid. At year- end, liabilities amounted to $25,000. On the last day of the year, 100 shares of stock were purchased from a disgruntled stockholder at $22 per share (assume the cost method). At year end, what amount will the company report as treasury stock? SHOW YOUR WORK.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:26.
ABC Corporation's charter authorized 120,000 shares of common stock, par $10. During the first year,
25,000 shares were sold and issued at $18 per share; in addition, 800 shares were subscribed for at the
same price. One half of the subscription price was collected during the year. At the end of the first
year, reported net income was $22,000 and cash dividends of $6,000 were declared and paid. At year-
end, liabilities amounted to $25,000. On the last day of the year, 100 shares of stock were purchased
from a disgruntled stockholder at $22 per share (assume the cost method).
At year end, what is the total amount of the company's legal capital? SHOW YOUR WORK.
27.
ABC Corporation's charter authorized 120,000 shares of common stock, par $10. During the first year,
25,000 shares were sold and issued at $18 per share; in addition, 800 shares were subscribed for at the
same price. One half of the subscription price was collected during the year. At the end of the first
year, reported net income was $22,000 and cash dividends of $6,000 were declared and paid. At year-
end, liabilities amounted to $25,000. On the last day of the year, 100 shares of stock were purchased
from a disgruntled stockholder at $22 per share (assume the cost method).
At year end, what amount will the company report as treasury stock? SHOW YOUR WORK.
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