Problem 153 Hatch Company has two classes of capital stock o

Problem 15-3

Hatch Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par common. At December 31, 2014, the following accounts were iHatch Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par common. At December 31, 2014, the following accounts were included in stockholders’ equity.

The following transactions affected stockholders’ equity during 2015.

Prepare the stockholders’ equity section for Hatch Company at December 31, 2015.

Solution

Hatch Company

Stockholders’ Equity Section of the Balance Sheet

For the year ended December 31, 2015

Shareholders’ Equity;

Preferred Stock, 192100 shares @ $20 par value

$3842000

Common Stock, 4347000 shares @ $2.50 par value

Additional paid in capital-common stock ($27240000 + $856000)

$28096000

Additional paid in capital-preferred stock ($203700 + $80600)

$284300

Additional paid in capital-Treasury stock ($10600 * $2))

$21200

Total contributed capital

$32243500

Retained earnings

$4166210

Less: Treasury stock (29100 * $9)

($261900)

Total stockholders’ equity

$36147810

Working Note;

Beginning balance

$4547000

Add: Net income

$2279000

Less: Preferred dividend paid

($268940)

Less: Common stock dividend paid (4347000 * 0.55)

($2390850)

Ending retained earnings

$4166210