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 Balance Sheet March 31
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 Income Statement For the Month Ended March 31
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   Cash and cash equivalents (6)   Accounts receivable (7)   Allowance for uncollectible  accounts (7)   Merchandise inventory (8) Property, plant, & equipment   Land (9)   Buildings (9)   Accumulated depreciation,  buildings (9)   Equipment (9)   Accumulated depreciation,  equipment (9)   Autos & trucks (9)   Accumulated depreciation,  autos & trucks (9)		Current Liabilities   Notes payable (10)   Accounts payable (10)   Taxes payable (10)   Current portion of long-term debt (10) Long-term Liabilities Bonds payable (11)   Deferred taxes  payable (11)   Obligations under capital leases (11)		Contributed Capital   Preferred stock (12)   Common stock (12)   Additional paid-in  capital (12)   Treasury stock (12) Revenues   Sales (7)   Sales returns and  allowances (7) Cost of goods sold (8) Operating Expenses   Bank service expense (6)   Uncollectible accounts expense (7)   Depreciation expense (9)   Salaries & wages  expense (10)   Payroll taxes expense (10) Other Revenues & Expenses   Interest revenue (6)   Interest expense (6) & (11)   Gain or loss on disposal  of property, plant, and equipment (9) Extraordinary Items   Gains or losses on early retirement of debt Income taxes expense (10)

** You now have the background to do text problems 12.1 and 12.2.

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