A corporation has authorized share capital of 1 million shares, of which 800,000 shares are issued and 200,000

Question

A corporation has authorized share capital of 1 million shares, of which 800,000 shares are issued and 200,000 are treasury shares. Construct the equity portion of the balance sheet if the net common equity is $40 million, all shares were issued with a par value of $1 and an issue price of $25, and retained earnings are $30 million.

Answer 1

STOCKHOLDERS' EQUITY
Common stock - $1 par value, 1m shares authorised,
- 800,000 shares issued, and 600,000 shares outstanding $800,000
- Paid-in capital in excess of par $19,200,000
Total paid-in capital $20,000,000
Retained earnings $30,000,000
Sub-total $50,000,000
Less: Treasury stock, 200,000 shares at cost ($10,000,000)
Total stockholders' equity $40,000,000