Page 534 - Accounting Principles (A Business Perspective)

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treasury stock.
When treasury stock is held on a balance sheet date, it customarily appears at cost, as a deduction from the sum
of total paid-in capital and retained earnings, as follows:
Hypothetical Corporation
Partial balance sheet
2010 December 31
Stockholder's equity:
Paid-In capital:
Preferred stock -8%, $100 par value; 2,000 $200,000
shares authorized, issued, and outstanding
Common stock-$10 par value; authorized, $800,000
100,000 shares; issued, 80,000 shares of which
1,000 are held in the treasury
Stock dividend distributable on common stock on 79,000 879,000
2011 January 15, 7,900 shares
Paid-in capital-
From common stock issuances $40,000
From stock dividends 60,000
From treasury stock transactions 30,000
From donations 50,000 180,000
Total paid-in capital $1,259,000
Retained earnings:
Appropriated:
Per loan agreement $250,000
Unappropriated (restricted to the extent of $150,000
$20,000, the cost of treasury shares held)
Total retained earnings 400,000
Total paid-in capital and retained earnings $1,659,000
Less: Treasury stock, common, 1,000 shares at 20,000
cost
Total stockholders' equity $1,639,000
Exhibit 103: Stockholders' equity section of the balance sheet
Stockholders' equity:
Paid-in capital:
Common stock-$10 par value; authorized and issued, $200,000
20,000 shares, of which 2,000 shares are in the
treasury
Retained earnings (including $22,000 restricted by 80,000
acquisition of treasury stock)
Total paid-in capital and retained earnings $280,000
Less: Treasury stock at cost, 2,000 shares 22,000
Total stockholders' equity $258,000

An accounting perspective:

Business insight

General Mills is a leading producer of ready-to-eat cereals, desserts and baking mixes, snack
products, and dinner and side dish mixes. Popular brand names include Hamburger Helper, Betty
Crocker, and Yoplait. For 2001 and 2000, General Mills reported common stock in the treasury

(treasury stock) of 123,100,000 and 122,900,000 shares, respectively. General Mills deducted the
cost of these shares in the stockholders' equity section of the balance sheet.

To summarize much of what we have discussed in Chapters 12 and 13, we present the stockholders' equity
section of the balance sheet in Exhibit 103. This partial balance sheet shows: (1) the amount of capital assigned to
shares outstanding; (2) the capital contributed for outstanding shares in addition to that assigned to the shares; (3)
other forms of paid-in capital; and (4) retained earnings, appropriated and unappropriated.

Accounting Principles: A Business Perspective 535 A Global Text