Question

Question 1

Bridgeport Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par common. At December 31, 2020, the following accounts were included in stockholders’ equity.

Preferred Stock, 143,700 shares		$ 2,874,000
Common Stock, 1,980,000 shares		9,900,000
Paid-in Capital in Excess of Par—Preferred Stock		209,000
Paid-in Capital in Excess of Par—Common Stock		26,891,000
Retained Earnings		4,544,000

The following transactions affected stockholders’ equity during 2021.

Jan. 1		30,900 shares of preferred stock issued at $22 per share.
Feb. 1		50,100 shares of common stock issued at $19 per share.
June 1		2-for-1 stock split (par value reduced to $2.50).
July 1		28,100 shares of common treasury stock purchased at $10 per share. Bridgeport uses the cost method.
Sept. 15		9,200 shares of treasury stock reissued at $12 per share.
Dec. 31		The preferred dividend is declared, and a common dividend of 53¢ per share is declared.
Dec. 31		Net income is $2,139,000.

Prepare the stockholders’ equity section for Bridgeport Company at December 31, 2021. (Enter account name only and do not provide descriptive information.)

Answer 1

ANSWER:

Bridgeport Company

Stockholder's Equity

December 31, 2021

Particulars	Amount	Amount
Capital Stock
Preferred Stock (WN 1) (A)	3,492,000
Common Stock (WN 2) (B)	10,150,500
Total Capital Stock (A + B)		13,642,500
Additional paid in capital:
Paid in caiptal in excess of par - Preferred Stock (WN 1)	270,800
Paid in capital in excess of par - Common Stock (WN 2)	27,592,400
Paid in capital - Treasury Stock (WN 3)	18,400	27,881,600
Total Paid in Capital		41,524,100
Retained Earnings (WN 5)		4,296,671
Total paid in capital and Retained Earnings		45,820,771
Less: Treasury Stock (WN 4)		(189,000)
Total Stockholder's Equity		45,631,771

Working Notes:

WN 1) Preferred stock - Capital stock and additional paid in capital

	Capital Stock	Additional paid in capital
Beginning Balance	2,874,000	209,000
Add: Issue on January 1	618,000 (30,900 * 20)	61,800[30,900 * (22 - 20)]
Ending Balance	3,492,000	270,800

WN 2) Common stock - Capital stock and additional paid in capital

	Capital Stock	Additional paid in capital
Beginning Balance	9,900,000	26,891,000
Add: Issue on February 1	250,500 (50,100 * 5)	701,400 [50,100 * (19 - 5)]
Ending Balance	10,150,500	27,592,400

WN 3) Treasury Stock paid in capital

Reissue of Treasury Stock (9,200 * 12)	110,400
Less: Cost of Treasury Stock (9,200 * 10)	(92,000)
Treasury Stock paid in capital	18,400

WN 4) Treasury Stock at cost which was not issued

Treasury stock = (28,100 - 9,200) * 10 = $189,000

WN 5) Retained Earnings:

Beginning Balance	4,544,000
Add: Net Income	2,139,000
Less: Dividend	(2,386,329)
Ending Balance	4,296,671

Total Dividend

Preference Dividend (3,492,000 * 7%)	244,440
Common Dividend (4,041,300 * $0.53)	2,141,889
Total Dividend	2,386,329

Number of Common shares on which dividend is given

No. of Initial Shares	1,980,000
Add: Fresh issue on February 1	50,100
Total Common Shares	2,030,100
No. Shares aftes stock stock split (2,030,100 * 2)	4,060,200
Less: Number of Treasury stock purchased	(28,100)
Add: Number of Treasury stock re-issued	9,200
Number of Common shares for dividend	4,041,300