Question

Peeler Company was incorporated as a new business on January 1, 2017. The corporate charter approved on that date authorized the issuance of 1,100 shares of $100 par, 7% cumulative, nonparticipating preferred stock and 12,000 shares of $5 par common stock. On January 10, Peeler issued for cash 430 shares of preferred stock at $120 per share and 4,000 shares of common stock at $81 per share. On January 20, it issued 1,500 shares of common stock to acquire a building site at a time when the stock was selling for $72 per share.

During 2017, Peeler established an employee benefit plan and acquired 530 shares of common stock at $58 per share as treasury stock for that purpose. Later in 2017, it resold 120 shares of the stock at $66 per share.

On December 31, 2017, Peeler determined its net income for the year to be $43,600. The firm declared the annual cash dividend to preferred stockholders and a cash dividend of $4 per share to the common stockholders. The dividends will be paid in 2018.

Required:

1. Develop the Stockholders' Equity category of Peeler's balance sheet as of December 31, 2017. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Peeler Company
Partial Balance Sheet
December 31, 2017
Stockholders' equity
Preferred stock	$
Common stock
Additional paid-in capital-preferred stock
Additional paid-in capital-common stock
Additional paid-in capital-treasury stock
Total contributed capital	$
Retained earnings
Treasury stock
Total stockholders' equity	$

2. Indicate on the statement the number of shares authorized, issued, and outstanding for both preferred and common stock.

	Preferred Stock	Common Stock
Number of shares authorized
Number of shares issued
Number of shares outstanding

Answer 1

1.

Working note:

Outstanding common stock = 4,000+1,500-530+120 =5,090 shares
Outstanding preferred stock = 430
Common dividend = 5,090 x $4 =$20,360
Preferred dividend = 430 x$100 x 7% = $3,010
Total dividend = $20,360+$3,010 = $23,370.
Net income	43,600
Less: Dividend	23,370
Retained earnings	20,230

2.

	Preferred stock	Common stock
Number of shares authorized	1,100	12,000
Number of shares issued	430	5,500
Number of shares outstanding	430	5,090