Question

Exercise 15-18 Nash Company reported the following amounts in the stockholders' equity section of its December 31, 2016, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 1,900 shares issued) $190,000 Common stock, $5 par (101,000 shares authorized, 20,200 shares issued) 101,000 Additional paid-in capital 125,000 Retained earnings 431,000 Total $847,000 During 2017, Nash took part in the following transactions concerning stockholders' equity. 1. Paid the annual 2016 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2016. 2. Purchased 1,800 shares of its own outstanding common stock for $43 per share. Nash uses the cost method. 3. Reissued 700 treasury shares for land valued at $31,600. 4. Issued 530 shares of preferred stock at $104 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $47 per share. 6. Issued the stock dividend. 7. Declared the annual 2017 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2018.

Answer 1

Answer - (a) -

No.	Account Titles and Explanation	Debit ($)	Credit ($)
1.	Dividends Payable - Preferred Stock [1900 shares * $10] Dividends Payable - Common Stock [20200 shares * $2] Cash	19000 40400 -	- - 59400
2.	Treasury Stock [1800 shares * $43] Cash	77400 -	- 77400
3.	Land Treasury Stock [700 shares * $43] Paid-in Capital from Treasury Stock [Difference]	31600 - -	- 30100 1500
4.	Cash [530 shares * $104] Preferred Stock [530 shares * $100] Paid-in Capital in Excess of Par - Preferred Stock [Difference]	55120 - -	- 53000 2120
5.	Retained Earnings [(19100 shares * 10%)  * $47] Common Stock Dividend Distributable [(19100 shares * 10%)  * $5] Paid-in Capital in Excess of Par - Common Stock [Difference]	89770 - -	- 9550 80220
6.	Common Stock Dividend Distributable Common Stock	9550 -	- 9550
7.	Retained Earnings Dividends Payable - Preferred Stock [2430 shares * $10] Dividends Payable - Common Stock [(19100+1910) shares * $2]	66320 - -	- 24300 42020

.

Answer - (b) -

NASH COMPANY

Stockholders’ Equity

December 31, 2017

	Calculation	Amount($)
Capital stock	-	-
Preferred stock	2430 shares * $100 par	243000
Common stock	21010 shares * $5 par	105050
Total capital stock	$243000 + $105050	348050
Additional paid-in capital	$125000 + $1500 + $2120 + $80220	208840
Total paid-in capital	$348050 + $208840	556890
Retained earnings	$431000 - $89770 - $66320 + $314000	588910
Total paid-in capital and retained earnings	$556890 + $588910	1145800
Less: Treasury stock	1100 shares * $43	47300
Total stockholders’ equity	$1145800 - $47300	1098500