Flounder Company has two classes of capital stock outstanding: 8%, $20 par prefe
ID: 2587753 • Letter: F
Question
Flounder Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders’ equity.
Preferred Stock, 136,300 shares $ 2,726,000
Common Stock, 2,036,000 shares 10,180,000
Paid-in Capital in Excess of Par—Preferred Stock 191,000
Paid-in Capital in Excess of Par—Common Stock 27,457,000
Retained Earnings 4,469,000
The following transactions affected stockholders’ equity during 2018.
Jan. 1 32,500 shares of preferred stock issued at $24 per share.
Feb. 1 46,400 shares of common stock issued at $21 per share.
June 1 2-for-1 stock split (par value reduced to $2.50).
July 1 28,300 shares of common treasury stock purchased at $10 per share. Flounder uses the cost method.
Sept. 15 9,700 shares of treasury stock reissued at $12 per share.
Dec. 31 The preferred dividend is declared, and a common dividend of 48¢ per share is declared.
Dec. 31 Net income is $2,070,000.
Prepare the stockholders’ equity section for Flounder Company at December 31, 2018. (Enter account name only and do not provide descriptive information.)
Explanation / Answer
Flounder COMPANY
Stockholders’ Equity
December 31, 2017
Capital stock
Preferred stock 3376000
Common stock 10412000
Total capital stock 13788000
Additional paid-in capital
Paid-in capital in excess of preferred stock 321000
Paid-in capital in excess of common stock 28199400
Paid-in capital from treasury stock 19400
28539800
Total paid-in capital 42327800
Retained earnings 5274024
Total paid-in capital and retained earnings 47601824
Less: treasury stock 186000
Total stockholder’s equity 47415824
(2726000+(32500*20)) = 3376000
(10180000+(46400*5)) = 10412000
(191000+(32500*4)) = 321000
(27457000+(46400*16)) = 28199400
(9700*2) = 19400
(4469000+2070000-((136300+32500)*20*8%)-((((2036000+46400)-9700)*0.48))) = 5274024
(28300-9700)*10 = 186000
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