Houghton Company began business on January 1, 2015 by issuing all of its 1,800,0

Question

Houghton Company began business on January 1, 2015 by issuing all of its 1,800,000 authorized shares of its $2 par value common stock for $35 per share. On June 30, Houghton declared a cash dividend of $2.50 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 360,000 of its own shares of stock for $40 per share. On December 22, Houghton resold 180,000 of these shares for $46 per share. Required: b. Prepare the stockholders' equity section of the balance sheet as of December 31, 2015 assuming that the net income for the year was $10,500,000.

Explanation / Answer

Houghton Company

Balance Sheet ( Partial) as of December 31, 2015

Stockholders' Equity

$ Common stock ( 1,800,000 shares autorized and issued, $ 2 par) 3,600,000 Additional paid-in capital- Common stock 59,400,000 Additional paid-in capital-treasury stock 1,080,000 Treasury stock ( 180,000 shares) ( 7,200,000) Retained earnings 6,000,000 Total stockholders' equity 62,880,000

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