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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