Question
In: Accounting
The Shareholders’ Equity section of Hamilton Design Company’s December 31, 2019, balance sheet appeared as follows:...
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.
Solutions
Expert Solution
| 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 |
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