Problem 153 Hatch Company has two classes of capital stock o

Problem 15-3 Hatch Company has two classes of capital stock outstanding: 8%, S20 par preferred and $5 par common. At December 31, 2017, 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 2018. Jan. 1 Feb. 1 June 1 July 1 Sept. 15 Dec. 31 30,000 shares of preferred stock issued at $22 per share. 50,000 shares of common stock issued at $20 per share. 2-for-1 stock split (par value reduced to $2.50). 30,000 shares of common treasury stock purchased at $10 per share. Hatch uses the cost method. 10,000 shares of treasury stock reissued at $11 per share. The preferred dividend is declared, and a common dividend of 50¢ per share is declared. Net income is $2,100,000. Dec. 31 Prepare the stockholders\' equity section for Hatch Company at December 31, 2018. (Enter account name only and do not provide descriptive information. HATCH COMPANY Stockholders\' Equity

Solution

HATCH COMPANY Stockholders’ Equity December 31, 2018 Capital Stock Preferred Stock      3,600,000 Common Stock    10,250,000 Total Capital Stock    13,850,000 Assitional Paid in capital Preferred Stock          260,000 Common Stock    27,750,000 Treasury Stock            10,000    28,020,000 Total Paid in Capital    41,870,000 Retained Earnings      4,272,000 Total Paid-in Capital and Retained Earnings    46,142,000 Less:Treasury Sstock          200,000 Total Stockholders\' Equity    45,942,000 Preferred Stock Balance      3,000,000 Jan 1 30000*20          600,000      3,600,000 Paid-in Capital in Excess of Par—Common Stock Balance    27,000,000 Jan 1 50000*15          750,000    27,750,000 Common Stock Balance    10,000,000 Feb 1 50000*5`          250,000    10,250,000 Retained Earnings Balance      4,500,000 Less: Dec 31 3600000*8%          288,000 Less: Dec 31 ((2000000+50000)*2)-30000+10000 =4080000*.5      2,040,000 Add : Net income      2,100,000      4,272,000 Paid-in Capital in Excess of Par—Preferred Stock Balance          200,000 Jan 1 30000*2            60,000          260,000 Treasury Stock July 1 30000*10          300,000 Sep 15 10000*10          100,000          200,000 Paid-in Capital from Treasury Stock 10000*1            10,000