Hatch Company has two classes of capital stock outstanding: 8%, $20 par preferre

Question

Hatch Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par common. At December 31, 2014, the following accounts were included in stockholders’ equity.

The following transactions affected stockholders’ equity during 2015.

Prepare the stockholders’ equity section for Hatch Company at December 31, 2015. (Enter account name only and do not provide descriptive information.)

HATCH COMPANY
Stockholders’ Equity
December 31, 2015

Preferred Stock, 152,000 shares $ 3,040,000 Common Stock, 2,073,000 shares 10,365,000 Paid-in Capital in Excess of Par—Preferred Stock 201,000 Paid-in Capital in Excess of Par—Common Stock 27,320,000 Retained Earnings 4,547,000

Explanation / Answer

Par value of 32900 preferred shares $   6,58,000 (32900*$20) Paid in capital in excess of par value- preferred $       65,800 par value of common shares issued $   2,67,000 (53400 * $5) paid in capital in excess of par value - common stock $   8,54,400 (53400* $16) Paid in capital - treasury stock $       21,600 (10800 * $2) Amount of preferred dividend declared $   2,95,840 ($3040000+$658000) * 8% Number of common stocks on which dividend declared: common stock as on as on Dec 31, 2014 2073000 Additional issue 53400 Total outstanding before stock split 2126400 Total number of shares in common stock after 2-1 stock split 4252800 less: purchase of treasury stock 31400 4221400 Ladd sale of treasury stock 10800 Number of shares outstanding on Dec, 31 2015 4232200 Amount of dividend declared on common stock $ 21,16,100 (4232200 * $0.50) Retained earnings as on 31 dec, 2014 $ 45,47,000 Add: net income $ 21,83,000 Retained earnings available for distribution $ 67,30,000 Less: dividends Preferred stock $      2,95,840 Common stock $   21,16,100 $ 24,11,940 Retained earnings as on 31 Dec, 2015 $ 43,18,060 Preferred Stock, 184900 shares $   36,98,000 Common Stock 4232200, $2.50 par $ 106,32,000 Paid in capital - treasury stock $         21,600 Paid-in Capital in Excess of Par—Preferred Stock $      2,66,800 Paid-in Capital in Excess of Par—Common Stock $ 281,74,400 Total Paid in capital $ 427,92,800 Add: Retained earnings $   43,18,060 $ 471,10,860 Less: treasury stock at cost (31400-10800) x $10 $      2,06,000 Shareholders' equity as on Dec 31, 2015 $ 469,04,860

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