Question

The Shareholders’ Equity section of Hamilton Design Company’s December 31, 2019, balance sheet appeared as follows:

Contributed Capital:
Preferred stock, 6%, $100 par (10,000 shares authorized, 1,250 shares issued)	$125,000
Additional paid-in capital on preferred stock	$55,000
Common stock, $10 par (60,000 shares authorized, 15,000 shares issued	$150,000
Additional paid-in capital on common stock	$105,000
Total contributed capital	$435,000
Retained earnings	$78,000
Contributed capital and retained earnings	$513,000
Less: Treasury Stock (300 shares of common at $14 per share)	($4,200)
Total Shareholders' Equity	$508,800

During 2020, the company entered into the following transactions affecting shareholders’ equity:

1. Issued 250 shares of preferred stock at $160 per share.

2. Issued 3,000 shares of common stock at $16 per share.

3. Declared and issued a 15% stock dividend. On the date of declaration, the market price of the shares was $19 per share.

4. Reacquired 200 of its own common shares as treasury stock for $15 per share.

5. Reissued 250 shares of treasury stock at $17 per share (FIFO basis).

6. Net income for 2020 was $70,400. Dividends of $25,000 were distributed.

Instructions: Prepare a statement of stockholders’ equity for the year ended December 31, 2020, for Hamilton. Use the “columnar format” show in your textbook.

***Please show all supporting calculations.

Answer 1

Statement of Shareholders Equity of the Hamilton Design Company's December 31, 2020 Amount Contributed Capital Preferred stock, 6%, $100 par (10,000 shares authorized, 1,250 shares issued Additional paid-in capital on preferred stock Common stock, $10 par (60,000 shares authorized, 15,000 shares issued Additional paid-in capital on common stock Total contributed capital Retained earnings Contributed capital and retained earnings Less: Treasury Stock (300 shares of common at $14 per share Total Shareholders' Equity as on 31st Dec 2019 Issued Preferred Stock (250 160) 250 shares issues @$160 Issued common Stock (3000 shares at $16 Gain on reissue transfer to Retained earnings Dividend declared Net Income Out standing Dividned to paid Total Shareholders' Equity as on 31st Dec 2019 Amount $125,000 $55,000 $150,000 $105,000 $435,000 $78,000 $513,000 $508,800 $508,800 $40,000 $48,000 $750 $25,000 $70,400 $26,300 $669,250 Treasury Stock (300 shares of common at $14 per share) Total Shareholders' Equity as on 31st Dec 2020 ($3,700) $665,550

Treasury stock	Amount
Treasury Stock (300 shares of common at $14 per share)	($4,200)
Reacquired Treasury Stock 200 shares @$15 per share	($3,000)
Reissued250 shares of Treasury	3500
Closing stock Treasury Stock250 shares	($3,700)
(50*14)+(200*15)= $3700

Dividend declared
Shares issued (Opening + Issued 2020)	18000
% of dividend	15%
	2700
Share price Market Value	$19
Share value	$51,300
Dividend declared	$25,000
O/S dividend	$26,300