Question

Stockholders’ Equity: Transactions and Balance Sheet Presentation

The stockholders’ equity accounts of Windham Corporation at January 1 appear below:

8 Percent preferred stock, $30 par value, 50,000 shares authorized;
6,800 shares issued and outstanding	$204,000
Common stock, $10 par value, 200,000 shares authorized;
50,000 shares issued and outstanding	500,000
Paid-in capital in excess of par value-Preferred stock	68,000
Paid-in capital in excess of par value-Common stock	200,000
Retained earnings	270,000

During the year, the following transactions occurred:

Jan.	10	Issued 28,000 shares of common stock for $21 cash per share.
	23	Purchased 8,000 shares of common stock as treasury stock at $23 per share.
Mar.	14	Sold one-half of the treasury shares acquired January 23 for $25 per share.
July	15	Issued 3,200 shares of preferred stock in exchange for equipment with a fair market value of $128,000.
Nov.	15	Sold 1,000 of the treasury shares acquired January 23 for $28 per share.
Dec.	31	Closed the net income of $59,000 to the Retained Earnings account.

Required

a. Set up T-accounts for the stockholders’ equity accounts as of the beginning of the year and enter the January 1 balances.

HINT: Complete part b. below prior to entering T-account data.

Answer 1

Windham Corporation				-
Date	Account	Debit	Credit	Calculation
10-Jan	Cash	588,000		=28,000*21
	Common Stock		280,000	=28,000*10
	Paid in Capital in Excess of Par Value-CS		308,000
23-Jan	Treasury Stock	184,000		=8,000*23
	Cash		184,000
14-Mar	Cash	100,000		=8,000/2*25
	Treasury Stock		92,000	=8,000/2*23
	Paid in Capital from Treasury Stock		8,000
15-Jul	Equipment	128,000
	Preferred Stock		96,000	=3,200*30
	Paid in Capital in Excess of Par Value-PS		32,000
15-Nov	Cash	28,000		=1,000*28
	Treasury Stock		23,000	=1,000*23
	Paid in Capital from Treasury Stock		5,000
31-Dec	Income Summary	59,000
	Retained Earnings		59,000

Date Windham Corporation T Accounts Date Debit Date Credit Preferred Stock Op bal $ 204,000 15-Jul $ 96,000 Date Debit Date Credit Paid in Capital in Excess of Par Value-PS Op bal $ 68,000 15-Jul $ 32,000 Debit Date Credit Common Stock Op bal $ 500,000 10-Jan $ 280,000 Date Debit Date Credit Paid in Capital in Excess of Par Value-CS Op bal $ 200,000 10-Jan $ 308,000 Bal. 780,000 Bal. $ 508,000 $ 300,000 Treasury Stock 23-Jan $ 184,000 14-Mar $ 92,000 15-Nov $ 23,000 Bal. $ 100,000 Paid in Capital from Treasury Stock 14-Mar $ 8,000 15-Nov $ 5,000 Bal. $ Retained Earnings Op bal $ 31-Dec $ 270,000 59,000 Bal. $ 69,000 Bal. $ 13,000 Bal. $ 329,000

Windham Corporation Balance Sheet (Partial) As of December 31 Stockholders Equity Capital Stock 8 Percent preferred stock, $30 par value, 50,000 shares authorized; 10,000 shares issued and outstanding Common stock, $10 par value, 200,000 shares authorized; 78,000 shares issued and 75,000 shares outstanding Total Capital Stock 300,000 780,000 1,080,000 100,000 508,000 13,000 Additional Paid in capital Paid in Capital in Excess of Par Value-Preferred Stock Paid in Capital in Excess of Par Value-Common Stock Paid in Capital from Treasury Stock Total Additional Paid in Capital Total Paid in Capital Retained Earnings Total Paid in Capital & Retained Earnings Less: Treasury Stock (3,000 shares @ $23 per share) Total Stockholders Equity 621,000 1,701,000 329,000 2,030,000 (69,000) 1,961,000 Workings Number of Common Shares Issued & outstanding Number of Common Shares - Opening Number of Common Shares Issued - Jan 10 Number of Common Shares Issued - Dec 31 50,000 28,000 78,000 Treasury Shares Treasury Shares - Opening Treasury Shares sold - Mar 14 Treasury Shares sold - Nov 15 Treasury Shares-Dec 31 Number of Common Shares outstanding - Dec 31 Shares outstanding=Shares issued less treasury shares 8,000 (4,000) (1,000) 3,000 75,000 =78,000-3,000 Number of Preferred Shares Issued & outstanding Number of Preferred Shares - Jan 1 Number of Preferred Shares Issued - July 15 Number of Preferred Shares Issued - Dec 31 6,800 3,200 10,000