Question

Hatch 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, 150,000 shares Common Stock, 2,000,000 shares Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock Retained Earnings $3,000,000 10,000,000 200,000 27,000,000 4,500,000 The following transactions affected stockholders' equity during 2021. Jan. 1 30,000 shares of preferred stock issued at $22 per share. Feb. 1 50,000 shares of common stock issued at $20 per share. June 1 2-for-1 stock split (par value reduced to $2.50). July 1 30,000 shares of common treasury stock purchased at $10 per share. Hatch uses the cost method. Sept. 15 10,000 shares of treasury stock reissued at $11 per share. Dec. 31 The preferred dividend is declared, and a common dividend of 50¢ per share is declared. Dec. 31 Net income is $2,100,000. Prepare the stockholders' equity section for Hatch Company at December 31, 2021. (Enter account name only and do not provide descriptive information.)
Please explain!

Answer 1

Hatch Company Stockholder's Equity December 31. 2021 $ 3,600,000.00 $ 10,250,000.00 $ 13,850,000.00 Capital Stock Preferred Stock Common stock Total Capital stock Additional paid in capital Paid in capital in excess of par - preferred stock Paid in capital in excess of par - Common stock Paid in capital from treasury shares $ 260,000.00 $ 10,000.00 Statement of Retained earnings Opening Balance Add: Net Income Total paid in capital Retained earnings Total paid in capital and retained earnings less: Treasury stock Total stockholders equity $ 28,020,000.00 $ 41,870,000.00 $ 4,272,000.00 $ 46,142,000.00 $ (200,000.00) $ 45,942,000.00 $ 4,500,000.00 $ 2,100,000.00 $ 6,600,000.00 $ (288,000.00) $ (2,040,000.00) $ 4,272,000.00 Less : Preferred dividend (3600000*8%) Less: Common dividend [(2000000+50000)*2) - 30000-10000]*$0.50 Closing Balance