Question

Duff incorporated on January 1, 2015 after receiving authorization to issue 10,000 shares of $50 par value preferred stock and 100,000 shares of $10 par value common, with the former having an 8% cumulative dividend feature. During fiscal 2018, the company engaged in the following equity transactions: January 1 Issued 1,000 shares of preferred stock for $80 each. January 1 Issued 10,000 shares of common stock for $30 each. June 30 Bought 1,000 shares of common stock for the treasury at $40 each. December 31 Declared the 8% dividend on the preferred stock and a $1.00 per-share dividend on the common after determining its fiscal 2018 comprehensive income to be $500,000, of which, $510,000 represented net income.

Required—Prepare in good form the stockholders’ equity section for 2015

Answer 1

Duff Inc.
Partial Balance Sheet
December 31,2015
Stockholders' Equity
Contributed capital
Preferred stock—$50 par value, 8 percent cumulative convertible, 10,000 shares authorized and 1,000 shares issued and outstanding (1000 x 50)	$    50,000.00
Additional paid-in capital, preferred (1000 x 30)	$    30,000.00
Common stock—$10 par value, 100,000 shares authorized, 10,000 shares issued ,9000 shares outstanding	$ 1,00,000.00
Additional paid-in capital, common (10000 x 20)	$ 2,00,000.00
Total contributed capital	$ 3,80,000.00
Retained earnings*	$ 4,97,000.00
Less: Treasury Stock = (1000 x $40)	$ -40,000.00
Total stockholders' equity	$ 8,37,000.00
Retained Earnings
Beginning RE	$                -
Add Net Income	$ 5,10,000.00
Less: Preferred Dividend = 8% x 50000	$      4,000.00
Less: Common Dividend = $ 1 x 9000	$      9,000.00
Ending RE	$ 4,97,000.00