FIN621 Ass Idea Solution

Question:Exxen limited was incorporated in January 2004 with authorization to issue 75,000 shares of Rs. 100 par value preferred stock and 1.5 million shares of Re. 1 par value of common stock. The company issued the 50,000 preferred shares at par. 700,000 shares of common stock were issued at Rs. 15 per share. The preferred stock was issued to pay a 9% cumulative dividend and is callable at Rs. 110. From the first year of incorporation to 2008 the company earned a total profit of Rs. 8,750,000 and paid dividend of Rs. 0.60 per share each year on the common stock. In 2009, the company reported a net Profit of Rs. 1,500,000 and paid no dividends to common stock holders.
 

Requirements: 

a. Prepare the stockholder’s equity section of the balance sheet from the information given above at December 31, 2009.
b. Show the complete calculation as it carries equal marks.

Idea Solution:

Preferred shares 5,000,000
Common shares 700,000
Common shares in excess of par value 9,800,000
Retained Earning 5,450,000
Total Stockholders' Equity 20,950,000

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