A computer virus destroyed important financial information
Question and Solution
A computer virus destroyed important financial information pertaining to Paseo Company’s stockholders’ equity section. Your expertise is needed to compute the missing account balances. The only information you can recover from the computer’s backup system is as follows:
a. During 2012, 7,000 shares of common stock with a par value of $1 were issued when the market price per share was $12. b. Cash dividends of $25,000 were paid to preferred shareholders. c. Paseo Company acquired 3,000 shares of common stock at $14 to hold as treasury stock. d. Paseo Company reissued 2,500 shares of treasury stock for $16. Required: 1. Calculate the account balances for the following accounts: a. Common Stock b. Paid-In Capital in Excess of Par, Common Stock c. Paid-In Capital, Treasury Stock d. Stockholders’ Equity 2. How much net income did Paseo Company report for2012?