Question

Larkspur Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders’ equity. Preferred Stock, 152,200 shares $ 3,044,000 Common Stock, 2,039,000 shares 10,195,000 Paid-in Capital in Excess of Par—Preferred Stock 202,000 Paid-in Capital in Excess of Par—Common Stock 26,684,000 Retained Earnings 4,587,000 The following transactions affected stockholders’ equity during 2018. Jan. 1 32,600 shares of preferred stock issued at $23 per share. Feb. 1 49,300 shares of common stock issued at $19 per share. June 1 2-for-1 stock split (par value reduced to $2.50). July 1 29,900 shares of common treasury stock purchased at $10 per share. Larkspur uses the cost method. Sept. 15 10,300 shares of treasury stock reissued at $12 per share. Dec. 31 The preferred dividend is declared, and a common dividend of 52¢ per share is declared. Dec. 31 Net income is $2,134,000. Prepare the stockholders’ equity section for Larkspur Company at December 31, 2018. (Enter account name only and do not provide descriptive information.) LARKSPUR COMPANY Stockholders’ Equity $ $ : $

Answer 1

Journal entries
date	explanation	debit	credit
1-Jan	cash	749800
	preferred stock		652000
	additional paid in capital-preferred stock		97800
1-Feb	cash	936700
	common stock		246500
	additional paid in capital-common		690200
1-Jun	common stock - 5	10441500
	common stock -2.5		10441500
1-Jul	treasury stock	299000
	cash		299000
15-Sep	cash	123600
	treasury stock		103000
	additional paid in capital- treasury stock		20600
31-Dec	retained earning	295680
	preferred dividend payable		295680
31-Dec	retained earning	2161640
	common stock dividend payable		2161640
statement of retained earnings
opening balance		4587000
add net income		2134000
total balance in retained earnings		6721000
less preferred dividend		295680
less common stock dividend		2161640
year end balance in retained earnings		4263680
statement of shareholders equity
preferred stock	652000+3044000	3696000
common stock	4157000*2.5	10392500
additional paid in capital- preferred stock	97800+202000	299800
additional paid in capital-common stock	690200+26684000	27374200
additional paid in capital-treasury stock		20600
less treasury stock	(29900-10300)*10	-196000
retained earnings		4263680
shareholders equity		45850780
no of common stock after stock split	(2039000+49300)*2	4176600
less treasury stock		29900
add treasury stock reissued		10300
common stock outstanding		4157000