Question

Stellar 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, 145,100 shares $ 2,902,000 Common Stock, 1,980,000 shares 9,900,000 Paid-in Capital in Excess of Par—Preferred Stock 202,000 Paid-in Capital in Excess of Par—Common Stock 26,715,000 Retained Earnings 4,411,000 The following transactions affected stockholders’ equity during 2018. Jan. 1 32,800 shares of preferred stock issued at $23 per share. Feb. 1 49,600 shares of common stock issued at $20 per share. June 1 2-for-1 stock split (par value reduced to $2.50). July 1 31,800 shares of common treasury stock purchased at $10 per share. Stellar uses the cost method. Sept. 15 10,900 shares of treasury stock reissued at $11 per share. Dec. 31 The preferred dividend is declared, and a common dividend of 46¢ per share is declared. Dec. 31 Net income is $2,088,000. Prepare the stockholders’ equity section for Stellar Company on December 31, 2018.

Answer 1

Stockholder's equity
Paid in Capital
Common Stock, $2.5 par value, 4059200 shares	$       10,148,000		=9900000+49600*5
8% Preferred Stock, $20 par value, 177900 shares	$          3,558,000		=2902000+32800*20
Paid in capital in excess of par-Preferred Stock	$             300,400		=202000+32800*3
Paid in capital in excess of par-Common Stock	$       27,459,000		=26715000+49600*15
Paid in capital from Treasury Stock	$                10,900		=10900*1
Total Paid in capital		$    41,476,300
Retained Earnings		$      3,796,902	=4411000-10556000*8%-(4059200-31800+10900)*0.46+2088000
		$    45,273,202
Less Treasury Stock, 20900 shares		$          209,000	=31800*10-10900*10
Total Stockholder's equity		$    45,482,202