The ledger of Wade Corporation at December 31, 2014, after the books have been c
ID: 2497533 • Letter: T
Question
The ledger of Wade Corporation at December 31, 2014, after the books have been closed, contains the following stockholders’ equity accounts. Preferred Stock (13,700 shares issued) $1,370,000 Common Stock (291,000 shares issued) 1,455,000 Paid-in Capital in Excess of Par Value—Preferred Stock 224,900 Paid-in Capital in Excess of Stated Value—Common Stock 1,594,400 Retained Earnings 2,835,030 A review of the accounting records reveals this information: 1. Preferred stock is 7%, $100 par value, noncumulative. Since January 1, 2013, 13,700 shares have been outstanding; 27,400 shares are authorized. 2. Common stock is no-par with a stated value of $5 per share; 582,000 shares are authorized 3. The January 1, 2014, balance in Retained Earnings was $2,394,430. 4. On October 1, 57,400 shares of common stock were sold for cash at $8 per share. 5. A cash dividend of $408,000 was declared and properly allocated to preferred and common stock on November 1. No dividends were paid to preferred stockholders in 2013. 6. Net income for the year was $848,600. 7. On December 31, 2014, the directors authorized disclosure of a $158,000 restriction of retained earnings for plant expansion. (Use Note A.)
Explanation / Answer
Solution :
STOCKHOLDERS EQUITY
CAPITAL STOCK :
PREFERRED STOCK, $100 PAR VALUE,8% 23600 SHARES AUTHORISED,
11800 SHARES ISSUED AND OUTSTANDING
1,180,000
COMMON STOCK, $5 PAR VALUE, 674800 SHARES AUTHORISED,
337400 SHARES ISSUED AND OUTSTANDING
1,687,000
2,867,000
ADDITIONAL PAID IN CAPITAL :
PAID IN EXCESS OF PAR VALUE - PREFERRED STOCK
154,300
PAID IN EXCESS OF PAR VALUE - COMMON STOCK
1,624,400
TOTAL PAID IN CAPITAL
1,778,700
RETAINED EARNING
2,804,590
TOTAL STOCKHOLDER'S EQUITY
7,450,290
RETAINED EARNING
Preferred shares dividend
94,400
opening balance
2,353,390
common shares dividend
300,400
net income
846,000
closing balance
2,804,590
3,199,390
3,199,390
STOCKHOLDERS EQUITY
CAPITAL STOCK :
PREFERRED STOCK, $100 PAR VALUE,8% 23600 SHARES AUTHORISED,
11800 SHARES ISSUED AND OUTSTANDING
1,180,000
COMMON STOCK, $5 PAR VALUE, 674800 SHARES AUTHORISED,
337400 SHARES ISSUED AND OUTSTANDING
1,687,000
2,867,000
ADDITIONAL PAID IN CAPITAL :
PAID IN EXCESS OF PAR VALUE - PREFERRED STOCK
154,300
PAID IN EXCESS OF PAR VALUE - COMMON STOCK
1,624,400
TOTAL PAID IN CAPITAL
1,778,700
RETAINED EARNING
2,804,590
TOTAL STOCKHOLDER'S EQUITY
7,450,290
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