Question

Problem 15-3

Metlock 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, 152,800 shares		$ 3,056,000
Common Stock, 1,998,000 shares		9,990,000
Paid-in Capital in Excess of Par—Preferred Stock		200,000
Paid-in Capital in Excess of Par—Common Stock		26,724,000
Retained Earnings		4,571,000

The following transactions affected stockholders’ equity during 2018.

Jan. 1		27,600 shares of preferred stock issued at $24 per share.
Feb. 1		51,100 shares of common stock issued at $20 per share.
June 1		2-for-1 stock split (par value reduced to $2.50).
July 1		27,400 shares of common treasury stock purchased at $10 per share. Metlock uses the cost method.
Sept. 15		9,400 shares of treasury stock reissued at $11 per share.
Dec. 31		The preferred dividend is declared, and a common dividend of 55¢ per share is declared.
Dec. 31		Net income is $2,076,000.

Prepare the stockholders’ equity section for Metlock Company at December 31, 2018. (Enter account name only and do not provide descriptive information.)

Answer 1

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Stockholder's Equity Section
Metlock Company
Capital Stock
Preferred stock, $20 par,
8%, 180,400 shares issued and outstanding		$   3,608,000
Common stock, $2.50 par,
4,051,200 shares issued, 4,033,200 shares outstanding		$ 10,245,500
Total Capital Stock		$ 13,853,500
Additional Paid-in Capital
In excess of par—preferred stock	$                                          310,400
In excess of par—common stock	$                                    27,490,500
From treasury stock	$                                              9,400	$ 27,810,300
Total Paid in capital		$ 41,663,800
Retained Earning		$   4,114,250
Total Paid in capital and Retained Earning		$ 45,778,050
Less: Treasury Stock 18000 Shares		$     -180,000
Total Stockholder's Equity		$ 45,598,050
Working in the form of T Accounts
	Preferred Stock
	Debit		Credit
			Beginning Balance	$ 3,056,000
			Jan 1 (27600*20)	$     552,000
			Ending Balance	$ 3,608,000
	Paid in Capital in excess of par, Common
	Debit		Credit
			Beginning Balance	$26,724,000
			Feb 1 (51100*15)	$     766,500
			Ending Balance	$27,490,500
	Common Stock
	Debit		Credit
			Beginning Balance	$ 9,990,000
			Feb 1 (51100*5)	$     255,500
			Ending Balance	$10,245,500
	Retained Earning
	Debit		Credit
	Dec 31 (3608000*8%)	$      288,640	Beginning Balance	$ 4,571,000
	Dec 31 (Working down)	$   2,244,110	Dec 31	$ 2,076,000
			Ending Balance	$ 4,114,250
	Paid in Capital in excess of par, Preferred
	Debit		Credit
			Beginning Balance	$     200,000
			Beginning Balance (27600*4)	$     110,400
			Ending Balance	$     310,400
	Treasury Stock
	Debit		Credit
	Jul 1	$      274,000	Sep 15 (9400*10)	$        94,000
	Ending Balance	$      180,000
	Paid in Capital in excess of par, Treasury
	Debit		Credit
			Sep 15 (9400*1)	$          9,400
			Ending Balance	$          9,400
	Common Stock Dividend
No of Shares	(1998000+51100)*2-27400+9400	4,080,200
Dividend	4080200*0.55	$   2,244,110