Wilco Corporation Has The Following Account Balances At Dece
Wilco Corporation Has The Following Account Balances At December 31, 2012
Wilco Corporation has the following account balances at December 31, 2012: Common stock, $5 par value $555,600; Treasury stock $90,720; Retained earnings $2,426,200; Paid-in capital in excess of par—common stock $1,321,900. Prepare Wilco’s December 31, 2012, stockholders’ equity section.
Paper For Above instruction
The stockholders’ equity section of a corporation's balance sheet summarizes the owners’ interest in the company and includes components such as common stock, preferred stock, additional paid-in capital, retained earnings, treasury stock, and sometimes accumulated other comprehensive income. Based on the given account balances for Wilco Corporation as of December 31, 2012, the stockholders’ equity section can be prepared as follows:
Stockholders’ Equity Section - Wilco Corporation, December 31, 2012
| Common Stock, $5 par value | $555,600 |
|---|---|
| Additional Paid-in Capital in Excess of Par—Common Stock | $1,321,900 |
| Retained Earnings | $2,426,200 |
| Treasury Stock (at cost) | ($90,720) |
| Total Stockholders’ Equity | $4,213,980 |
Note: Treasury stock is subtracted because it represents shares repurchased by the company. The total stockholders’ equity is calculated as the sum of the equity components less treasury stock.
Preparation of the Stockholders’ Equity Section
The equity section starts with the stock account balances: common stock and its excess paid-in capital, which are presented separately. The company’s retained earnings are added, and treasury stock is deducted to arrive at total stockholders’ equity. In this case, the total is calculated as:
Common Stock: $555,600
Paid-in Capital in Excess of Par: $1,321,900
Retained Earnings: $2,426,200
Less: Treasury Stock: $90,720
Total Stockholders’ Equity: $4,213,980
Therefore, the stockholders’ equity section reflects the total interest of shareholders after accounting for treasury shares, providing a clear snapshot of the company's net worth at the end of 2012.
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