Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $50 par value, 5,000 shares authorized, ? shares issued $300,000 Common stock, ? par, 10,000 shares authorized, 7,000 shares issued 70,000 Additional paid-in capital—Preferred 10,800 Additional paid-in capital—Common 420,000 Additional paid-in capital—Treasury stock 2,000 Total contributed capital $802,800 Retained earnings 40,000 Treasury stock, preferred, 100 shares (3,500) Total stockholders’ equity $ ? Determine the following items based on Eldon's balance sheet. Round all calculations except per-share amounts to the nearest whole number; round per-share amounts to the nearest cent. 2. The number of shares of preferred stock outstanding fill in the blank = shares 3. The average per-share sales price of the preferred stock when issued $fill in the blank = per share The cost of the treasury stock per share $fill in the blank = per share The per-share book value of the common stock assuming that there are no dividends in arrears and that the preferred stock can be redeemed at its par value $ per share
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Analysis of
The Stockholders' Equity section of the December 31, 2017,
| Preferred stock, $50 par value, 5,000 shares authorized, ? shares issued |
$300,000 |
| Common stock, ? par, 10,000 shares authorized, 7,000 shares issued |
70,000 |
| Additional paid-in capital—Preferred | 10,800 |
| Additional paid-in capital—Common | 420,000 |
| Additional paid-in capital— |
2,000 |
| Total contributed capital | $802,800 |
| 40,000 | |
| Treasury stock, preferred, 100 shares | (3,500) |
| Total stockholders’ equity | $ ? |
Determine the following items based on Eldon's balance sheet. Round all calculations except per-share amounts to the nearest whole number; round per-share amounts to the nearest cent.
2. The number of
fill in the blank = shares
3. The average per-share sales price of the preferred stock when issued
$fill in the blank = per share
The cost of the treasury stock per share
$fill in the blank = per share
The per-share book value of the common stock assuming that there are no dividends in arrears and that the preferred stock can be redeemed at its par value
$ per share
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