Nash Company has two classes of capital stock outstanding: 8%,
$20 par preferred and $5 par common. At December 31, 2020, the
following accounts were included in stockholders’ equity.
Preferred Stock, 148,100 shares | $ 2,962,000 | |
Common Stock, 1,961,000 shares | 9,805,000 | |
Paid-in Capital in Excess of Par—Preferred Stock | 191,000 | |
Paid-in Capital in Excess of Par—Common Stock | 27,124,000 | |
Retained Earnings | 4,537,000 |
The following transactions affected stockholders’ equity during
2021.
Jan. 1 | 28,400 shares of preferred stock issued at $24 per share. | |
Feb. 1 | 53,400 shares of common stock issued at $20 per share. | |
June 1 | 2-for-1 stock split (par value reduced to $2.50). | |
July 1 | 31,100 shares of common treasury stock purchased at $10 per share. Nash uses the cost method. | |
Sept. 15 | 9,900 shares of treasury stock reissued at $11 per share. | |
Dec. 31 | The preferred dividend is declared, and a common dividend of 54¢ per share is declared. | |
Dec. 31 | Net income is $2,093,000. |
Prepare the stockholders’ equity section for Nash Company at
December 31, 2021.
Answer:
Nash Company | ||
Balance Sheet (Partial) | ||
December 31, 2021 | ||
Stockholders' equity: | ||
Paid-in capital: | ||
Capital stock: | ||
Preferred Stock | $3,530,000 | |
Common Stock | $10,072,000 | |
Total Capital stock | $13,602,000 | |
Additional Capital: | ||
Paid-in Capital in Excess of Par—Preferred Stock | $304,600 | |
Paid-in Capital in Excess of Par—Common Stock | $27,925,000 | |
Paid in capital in excess from treasury stock | $9,900 | |
Total Additional Capital | $28,239,500 | |
Total Paid-in Capital | $41,841,500 | |
Retained earnings | $4,183,496 | |
Total paid-in capital and Retained earnings | $46,024,996 | |
(Less): Treasury stock | ($212,000) | |
Total stockholders' Equity | $45,812,996 |
Calculations:
Preferred stock |
Common stock |
Paid-in Capital in Excess of Par—Preferred Stock |
Paid-in Capital in Excess of Par—Common Stock |
Paid-in capital in excess from treasury stock |
Retained Earnings |
Treasury Stock |
|
Beginning balance | $2,962,000 | $9,805,000 | $191,000 | $27,124,000 | $4,537,000 | ||
Jan.1 | $568,000 | $113,600 | |||||
Feb.1 | $267,000 | $801,000 | |||||
June 1 (no entry for stock-split) | |||||||
July 1 | $311,000 | ||||||
Sept.15 | $9,900 | ($99,000) | |||||
Dec.31 | ($2,446,504)* | ||||||
Dec.31 | $2,093,000 | ||||||
Ending Balance | $3,530,000 | $10,072,000 | $304,600 | $27,925,000 | $9,900 | $4,183,496 | $212,000 |
*Dividend Calculations:
Preferred shares | |
Beg. Bal. | 148100 |
Jan.1 | 28400 |
Balance 12/31 | 176500 |
Common shares | |
Beg. Bal. | 1961000 |
Feb.1 | 53400 |
Balance | 2014400 |
Stock split | 2:1 |
Balance after stock split [2,014,400 x 2] | 4028800 |
Treasury stock | -31100 |
Sale of treasury stock | 9900 |
Balance on 12/31 | 4007600 |
Dividends | |
Preferred dividend [176,500 x $20 par x 8%] | $282,400 |
Common dividend [4,007,600 x $0.54] | $2,164,104 |
Total dividends | $2,446,504 |
Nash Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par...
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