Question

Problem 10-6A Record equity transactions and prepare the stockholders' equity section (LO10-2,10-3, 10-4,10-5,10-7) [The following information applies to the questions displayed below.] Major League Apparel has two classes of stock authorized: 4%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2021, its first year of operations: 2 Issue 120,e00 shares of common stock for $62 per share January February 14 Issue 52,000 shares of preferred stock for $13 per share May May December 8 Purchase 12,000 shares of its own common stock for $52 per share 31 Resell 6,000 shares of treasury stock for $57 per share 1 Declare a cash dividend on its common stock of $0.60 per share and a $20, 800 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint: Dividends are not paid on treasury stock.) December 30 Pay the cash dividends declared on December 1 Problem 10-6A Part 2 2. Prepare the stockholders' equity section of the balance sheet as of December 31,, 2021. Net income for the year was $482,000. (Amounts to be deducted should be indicated by a minus sign.) MAJOR LEAGUE APPAREL Balance Sheet (Stockholders' Equity Section) December 31, 2021 Stockholders' Equity: Total Paid-in Capital

Answer 1

WORKING NOTES: 1
	Common Stock	Paid in capital in excess of par - Common Stock	Preferred Stock	Paid in capital in excess of par - Preferred Stock	Treasury Stock	Paid in capital in excess of par - Treasury Stock
Balance
January, 02	$           1,20,000	$                       73,20,000
February , 14			$                5,20,000	$                  1,56,000
May, 08					$          6,24,000
May, 31					$        -3,12,000	$                  30,000
	$           1,20,000	$                       73,20,000	$                5,20,000	$                  1,56,000	$          3,12,000	$                  30,000
WORKING NOTES: 2
CALCULATION OF CLOSING BALANCE OF RETAINED EARNINGS
Net income		$                         4,82,000
Dividend on Common Shareholders =
Shares outstanding = 120,000 Shares -12,000 Shares + 6000 Shares=	1,14,000
Dividend per shares =	$                   0.60
Total Common Shares Dividend	$               68,400
Paid for Preferred stock	$               20,800
Total Dividend redued from retained earnings		$                             89,200
Ending balance of retained earnings		$                         3,92,800
SOLUTION :
STOCKHOLDER'S EQUITY
Contributed Capital
Common stock , $ 1 Par value	$           1,20,000
Addittional paid in capital
Paid in capial in excess of par - Common stock	$         73,20,000
Paid in capial in excess of par - Treasury stock	$               30,000
Preferred Stock	$           5,20,000
Paid in capial in excess of par - PREferred Stock	$           1,56,000
Total Contributed Capital	$         81,46,000
Retained Earnings	$           3,92,800
Total	$         85,38,800
Less: Treasurry Stock	$         -3,12,000
Total Stockholder's Equity	$         82,26,800