Financial reporting of contributed capital
Contributed capital appears as a major part of stockholders'
equity on the balance sheet, as shown below. Treasury stock is reported as a
reduction of stockholders' equity.
Christopher
Corporation |
||
Assets |
|
|
Current Assets |
|
|
Cash and Cash Equivalents |
|
$17,000 |
Accounts Receivable |
$62,000 |
|
Less: Allowance for Uncollectible Accounts |
6,000 |
56,000 |
Merchandise Inventory |
|
238,000 |
Total Current Assets |
|
$311,000 |
Property, Plant, and Equipment |
|
|
Land |
|
$40,000 |
Buildings |
$250,000 |
|
Accum. Depr., Buildings |
12,000 |
238,000 |
Machinery and Equipment |
$210,000 |
|
Accum. Depr., Machinery and Equipment |
46,000 |
164,000 |
Total Property, Plant, and Equipment |
|
$442,000 |
Other Assets |
|
7,000 |
Total Assets |
|
$760,000 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Liabilities |
|
|
Current Liabilities |
|
|
Accounts Payable |
|
$114,000 |
Income Taxes Payable |
|
26,000 |
Salaries and Wages Payable |
|
10,000 |
Total Current Liabilities |
|
$150,000 |
Long-term Liabilities |
|
|
Bonds Payable |
|
$250,000 |
Unamortized Premium on Bonds Payable |
|
20,000 |
Total Long-term Liabilities |
|
$270,000 |
Total Liabilities |
|
$420,000 |
|
|
|
Stockholders' Equity |
|
|
Contributed Capital |
|
|
Preferred Stock, $100 par, 6% |
|
$20,000 |
Common Stock, $1 par |
|
100,000 |
Additional Paid-in Capital, Preferred Stock |
|
3,000 |
Additional Paid-in Capital, Common Stock |
|
125,000 |
Total Contributed Capital |
|
$248,000 |
Retained Earnings |
|
96,000 |
Less: Treasury Stock |
|
(4,000) |
Total Stockholders' Equity |
|
$340,000 |
Total Liabilities and Stockholders' Equity |
|
$760,000 |
Contributed capital affects the income statement through
revenues and expenses as resources obtained from owners are used by management.
Transactions between the company and its owners do not directly affect the
income statement.
Christopher
Corporation |
|
Sales |
$530,000 |
Cost of Goods Sold |
318,000 |
Gross Profit |
$212,000 |
Operating Expenses |
|
Supplies Expense |
$7,000 |
Salaries and Wages Expense |
112,000 |
Depr. Expense, Buildings |
1,000 |
Depr. Expense, Machinery and Equipment |
3,000 |
Insurance Expense |
15,000 |
Rent Expense |
24,000 |
Uncollectible Accounts Expense |
11,000 |
Total Operating Expenses |
$173,000 |
Operating Income |
$39,000 |
Other Revenues and (Expenses) |
1,000 |
Income Before Taxes |
$40,000 |
Income Taxes Expense |
14,000 |
Net Income |
$26,000 |
** You now have the background to do text exercise 12.18.
Financial Reporting Summary
The following table summarizes the relationships among
the major topics examined in this and previous chapters. The numbers in
parentheses refer to the chapters in which the topics were discussed.
Resources |
= |
Sources of Resources |
||
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
Current Assets |
|
Current Liabilities |
|
Contributed Capital |
** You now have the background to do text problems 12.1 and 12.2.