Question

PART A-Record the following 2016 transctions for the Hasbro Corporation in the journal.

Jan. 1 Issued 30,000 shares of preferred stock for cash at $104 per share.

Feb. 2 Issued 490,000 shares of common stock for cash at $12 per share.

Mar. 3 Declared a cash dividend on the preferred stock $385,000.

Apr. 4 Discovered a $15,000 understatement of 2014 depreciation.  

May 5 Paid the cash dividend declared of March 3.

June 6 Issued 4,000 shares of common stock for land that was advertised for sale at $50,000. The stock market price of the stock is $12 per share.

Sept. 9 Kroger purchased 10,000 shares of its own common stock at $14 per share.

Oct. 10 Sold 3,000 shares of treasury stock for $18 per share

Nov. 11 Declared a $0.50 cash dividend per share on common stock for a total of $743,500.

Dec. 31 Net income was reported to be $950,000.

PART B. Based on the Hasbro Corp.partial trial balance below, prepare (a) a retained earnings statement for the year and (b) a stockholder’s equity section at December 31, 2016. Additional information you will need: when Hasbro began operations several years ago, they were authorized to issue 100,000 shares of 7%, $100 par value preferred stock and 5,000,000 shares of $4 par value common stock.

Hasbro Corporation

Adjusted Trial Balance-partial

December 31, 2016

Debit Credit

Preferred Stock CR 5,500,000

Common Stock CR 5,976,000

Paid-in-capital in excess of par value-Preferred CR 180,000

Paid-in-capital in excess of par value-Common CR 4,952,000

Retained Earnings 3,735,000*

Cash Dividends-Preferred Stock DR  385,000

Cash Dividends-Common Stock DR 743,500

Treasury Stock (7,000 shares) 98,000

Paid-in-capital from Treasury Stock 12,000

*The beginning Retained Earnings balance is $3,750,000,

then adjusted for the prior period adjustment

Answer 1

PART A: Journal Entries In the books of Hasbro Corporation

Date	General Journal	Debit in $	Credit in $
Jan 1	Cash	3,120,000
	To Preferred Stock		3,000,000
	To Paid in capital in excess of par value preferred shares		120,000
Feb 2	Cash	5,880,000
	To Common Stock		1,960,000
	To Paid in capital in excess of par value common shares		3,920,000
Mar 3	Cash Dividends-Preferred Stock	385,000
	To Dividend Payable		385,000
Apr 4	Retained Earning	15,000
	To Accumulated Depreciation		15,000
May 5	Dividend Payable	385,000
	To Cash		385,000
June 6	Cash	50,000
	To Common Stock (4000*4)		16,000
	To Paid in capital in excess of par value common shares		34,000
Sep 9	Treasury Stock	140,000
	To Cash		140,000
Oct 10	Cash	54,000
	To Treasury Stock		42,000
	To Paid in capital from treasury stock		12,000
Nov 11	Cash Dividend-Common Stock	743,500
	To Dividend Payable		743,500
Dec 31	Net Income	950,000
	To Retained Earnings		950,000

PART B.

HASBO COPR.

Statement of Retained Earnings for the year ended December 31, 2016

Balance January 1,2016	3,750,000
Correction of depreciation error	-15,000
Adjusted Balance on January 1,2016	3,735,000
Add: Net Income	950,000
	4,685,000
Deduct Dividend Declared
Cash dividend preferred Stock	385,000
Cash dividend Common Stock	743,500
Balance December 31,2016	3,556,500

Statement of Equity for the Year Ended December 31, 2016

Stockholders’ Equity
Contributed Capital
Preferred Stock- $100 par value, 7% cumulative convertible, 100,000 shares authorized and 55,000 shares outstanding	5,500,000
Paid-in-capital in excess of par value-Preferred	180,000
Common Stock - $4 par Value, 5,000,000 shares authorized and 1,494,000 shares outstanding	5,976,000
Paid-in-capital in excess of par value-Preferred	4,952,000
Paid-in-capital from Treasury stock	12,000
Total Contributed Capital	16,620,000
Retained Earnings	3,556,500
Total Shareholders’ Equity	20,176,500