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Novak Company has two classes of capital stock outstanding: 9%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders’ equity.

Preferred Stock, 165,000 shares		$ 3,300,000
Common Stock, 2,018,000 shares		10,090,000
Paid-in Capital in Excess of Par—Preferred Stock		204,000
Paid-in Capital in Excess of Par—Common Stock		27,531,000
Retained Earnings		4,490,000

The following transactions affected stockholders’ equity during 2018.

Jan. 1		29,100 shares of preferred stock issued at $24 per share.
Feb. 1		49,800 shares of common stock issued at $21 per share.
June 1		2-for-1 stock split (par value reduced to $2.50).
July 1		29,400 shares of common treasury stock purchased at $9 per share. Novak uses the cost method.
Sept. 15		9,400 shares of treasury stock reissued at $12 per share.
Dec. 31		The preferred dividend is declared, and a common dividend of 51¢ per share is declared.
Dec. 31		Net income is $2,123,000.

Prepare the stockholders’ equity section for Novak Company at December 31, 2018

Answer 1

Solution:

Stockholders' Equity
	$$
Preferred Stock,  194,100 shares	3882000
Common Stock, 4,135,600 shares	10,339,000
Paid-in Capital in Excess of Par—Preferred Stock (29100*4 + 204,000)	320,400
Paid-in Capital in Excess of Par—Common Stock (49,800*16 + 27,531,000)	28,327,800
Paid in Capital from Treasury Stock	28,200
Retained Earnings (4,490,000 + Net Income 2,123,000 - Preferred Dividend 194,100*$20*9% + Common stock dividend (204,000-20,000)*$0.51)	6,169,780
Total Pain in Capital and Retained Earnings	49,067,180
Less: Treasury Stock (20,000*9)	180,000
Total Stockholders' Equity	48,887,180

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