Trask Corporation, a public company whose shares are traded in the over-the-counter market, had the following shareholders’ equity account balances at December 31, 2016:
Common stock | $ | 7,875,000 | |
Additional paid-in capital (including stock options) | 16,050,000 | ||
Retained earnings | 16,445,000 | ||
Treasury common stock | 750,000 | ||
Transactions during 2017 and other information relating to the shareholders’ equity accounts follow:
Net income for 2017 was $2,400,000.
Required:
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Part - 1 | |||
Trask Corp. | |||
Statement of Retained Earnings | |||
For the Year Ended December 31, 2017 | |||
Balance, December 31, 2017, as originally reported | $16,445,000 | ||
Less. Prior period adjustment from error: | |||
understating depreciation | $350,000 | ||
Less income tax effect | -$105,000 | -$245,000 | |
As restated | $16,200,000 | ||
Net Income | $2,400,000 | ||
Less. Dividends: | |||
Cash dividend on preferred stock (50,000 shares x $100 x 6%) | $300,000 | ||
Dividend in kind on common stock Harbor stock (15,000 shares x $60) | $900,000 | -$1,200,000 | $1,200,000 |
Balance, December 31, 2018 | $17,400,000 | ||
Part - 2 | |||
Trask Corp. | |||
Stockholders’ Equity Section of Balance Sheet | |||
December 31, 2018 | |||
Preferred stock, $100 par value, 6% cumulative;150,000 shares authorized; 50,000 shares issue and outstanding | $5,000,000 | ||
Common stock, $5 par value; 4,000,000 shares authorized; 1,700,000 shares issued (calculated below- 1) | $8,500,000 | ||
Additional paid-in capital (Calculated below -2) | $16,975,000 | ||
Retained earnings | $17,400,000 | ||
Less common stock in treasury,100,000 shares at cost | -$500,000 | ||
Total stockholders’ equity | $47,375,000 | ||
1) | |||
Number of common shares issued and outstanding | |||
Number of common shares issued, 12/31/17 | 1,575,000 | ||
Less: Common shares retired | -25,000 | ||
Number of common shares issued, 6/1/18 | 150,000 | ||
1,700,000 | |||
Less: Common shares held in treasury | -50,000 | ||
Total number of common shares outstanding | 1,650,000 | ||
Amount of common shares issued | |||
Amount of common shares issued, 12/31/17 | $7,875,000 | ||
Less: Common shares retired at par value | -$125,000 | ||
Amount of common shares issued, 6/1/18 | $750,000 | ||
Total amount of common shares issued | $8,500,000 | ||
2) Amount of additional paid-in capital | |||
Amount at 12/31/17 = (1,605,000 x $10) | $16,050,000 | ||
Less: Treasury stock retired [25,000 shares @ $5 ($10 cost–$5 par value)] | -$125,000 | ||
Amount received upon issuance of common shares, 6/1/18 (150,000 shares @ ($7) | $1,050,000 | ||
Total amount of additional paid-in capital | $16,975,000 | ||
Part - 3 | |||
Trask Corp. | |||
Computation of Book Value per Share of Common Stock | |||
December 31, 2018 | |||
Total stockholders’ equity | $47,375,000 | ||
Deduct allocation to preferred stock | -$5,000,000 | ||
Allocation to common stock | $42,375,000 | ||
Divided by number of common shares outstanding (1,700,000 - 50,000) | ÷ 1,650,000 | ||
Book value per share of common stock | $25.68 |
Trask Corporation, a public company whose shares are traded in the over-the-counter market, had the following...
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