Question

On January 1, 2010 Fiberglass Industries was authorized to issue 750,000 shares of 3.00 par common stock, and 40,000 shares of 4% $25 par cumulative preferred stock.

Required: Using the information below, prepare the Stockholders' Equity Section of the Balance Sheet at December 31, 2011.

2010:

Jan 4th issued 100,000 shares common stock at $5/ share.

Jan 5th issued 10,000 shares preferred stock at $40/ share.

Feb 1st Issued 60,000 shares of common stock in exchange for a shop with an estimated fair market value of $367,500.

Aug 31st Declared a $.20 cash dividend on common stock.

Dec 31st Net Income was $1,537,900 for 2010.

2011:

Mar 1st Declared and distributed a 5% common stock dividend. The company's common stock was selling for $6 per share when the stock dividend was declared.

May 15th Purchase 4,000 shares of their own common stock for $7/share.

Aug 31st Declared a $.25 cash dividend on common stock.

Nov 15th Sold 2,000 shares of the treasury stock for 22,000 Dec 31st

Net income was $1,323,380 for 2011.

Answer 1

1.

Fiberglass Industries
Balance Sheet ( Partial)
December 31, 2011
Stockholders Equity	$
Common Stock , $ 3 par, 168,000 issued	504,000
Paid-in Capital in Excess of Par : Common Stock	411,500
Preferred Stock	250,000
Paid-in Capital in Excess of Par: Preferred Stock	150,000
Paid-in Capital : Treasury Stock	8,000
Retained Earnings	2,740,280
Treasury Stock ( at cost)	(14,000)
Total Stockholders' Equity	$ 4,049,780

In the books of Fiberglass Industries :

Date	Account Titles	Debit	Credit
2010		$	$
Jan 4	Cash	500,000
	Common Stock		300,000
	Paid-in Capital in Excess of Par : Common Stock		200,000
Jan 5	Cash	400,000
	Preferred Stock ( 10,000 x $ 25)		250,000
	Paid-in Capital in Excess of Par : Preferred Stock		150,000
Feb 1	Shop	367,500
	Common Stock ( 60,000 x $ 3)		180,000
	Paid-in Capital in Excess of Par : Common Stock		187,500
Aug 31	Retained Earnings	32,000
	Dividends Payable		32,000
Dec 31	Income Summary	1,537,900
	Retained Earnings		1,537,900
2011
Mar 1	Retained Earnings ( 160,000 x 5% x $ 6)	48,000
	Common Stock Dividend Distributable		24,000
	Paid-in Capital in Excess of Par : Common Stock		24,000
Mar 1	Common Stock Dividend Distributable	24,000
	Common Stock		24,000
May 15	Treasury Stock	28,000
	Cash		28,000
Aug	Retained Earnings	41,000
	Dividends Payable		41,000
Nov 15	Cash	22,000
	Treasury Stock		14,000
	Paid-in Capital in : Treasury Stock		8,000
Dec 31	Income Summary	1,323,380
	Retained Earnings		1,323,380