Question

Problem 15-12

Teal Company was formed on July 1, 2015. It was authorized to issue 298,000 shares of $10 par value common stock and 102,100 shares of 8% $25 par value, cumulative and nonparticipating preferred stock. Teal Company has a July 1–June 30 fiscal year.

The following information relates to the stockholders’ equity accounts of Teal Company.

Common Stock
Prior to the 2017–2018 fiscal year, Teal Company had 112,100 shares of outstanding common stock issued as follows.

1.		84,400 shares were issued for cash on July 1, 2015, at $29 per share.
2.		On July 24, 2015, 5,000 shares were exchanged for a plot of land which cost the seller $66,600 in 2009 and had an estimated fair value of $222,100 on July 24, 2015.
3.		22,700 shares were issued on March 1, 2016, for $43 per share.

During the 2017–2018 fiscal year, the following transactions regarding common stock took place.

November 30, 2017		Teal purchased 2,200 shares of its own stock on the open market at $41 per share. Teal uses the cost method for treasury stock.
December 15, 2017		Teal declared a 5% stock dividend for stockholders of record on January 15, 2018, to be issued on January 31, 2018. Teal was having a liquidity problem and could not afford a cash dividend at the time. Teal’s common stock was selling at $53 per share on December 15, 2017.
June 20, 2018		Teal sold 520 shares of its own common stock that it had purchased on November 30, 2017, for $25,200.

Preferred Stock
Teal issued 41,000 shares of preferred stock at $45 per share on July 1, 2016.

Cash Dividends
Teal has followed a schedule of declaring cash dividends in December and June, with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2018, are shown below.

Declaration Date		Common Stock		Preferred Stock
12/15/16		$0.30 per share		$1 per share
6/15/17		$0.30 per share		$1 per share
12/15/17				$1 per share

No cash dividends were declared during June 2018 due to the company’s liquidity problems.

Retained Earnings
As of June 30, 2017, Teal’s retained earnings account had a balance of $685,700. For the fiscal year ending June 30, 2018, Teal reported net income of $40,800.

Prepare the stockholders’ equity section of the balance sheet, for Teal Company as of June 30, 2018, as it should appear in its annual report to the shareholders. (Enter account name only and do not provide descriptive information.)

TEAL COMPANY Stockholders' Equity une 30, 2018 Capital Stock Preferred Stock Common Stock Total Capital Stock Additional Paid-in Capital Paid-in Capital in Excess of Par - Preferred Stock Paid-in Capital in Excess of Par -Common Stock Paid-in Capital from Treasury Stock Total Paid-in Capital Retained Earnings Total Paid-in Capital and Retained Earnings Less ▼ Treasury Stock Total Stockholders' Equity

Answer 1

Teal Company Stockholders' Equity June 30, 2018
	$	$
Capital Stock
Preferred Stock	1,025,000
Common Stock	1,175,950
Total Capital Stock		2,200,950
Additional Paid-in Capital
Paid-in Capital in Excess of Par: Preferred Stock	820,000
Paid-in Capital in Excess of Par : Common Stock	2,761,085
Paid-in Capital from Treasury Stock	3,880
		3,584,965
Total Paid-in Capital		5,785,915
Retained Earnings		394,265
Total Paid-in Capital and Retained Earnings		6,180,180
Less: Treasury Stock		(68,880)
Total Stockholders' Equity		$ 6,111,300

Workings:

		Common Stock ( $ 10 par )	Paid-in Capital in Excess of Par: Common Stock
1.	84,400	$ 844,000	$ 1,603,600
2.	5,000	50,000	172,100
3.	22,700	227,000	749,100
Nov 30, 2017	(2,200)
Dec 15, 2017	5,495	54,950	236,285
		1,175,950	2,761,085