Presented below is information related to Hale Corporation at December 31, 2017:
ID: 2585793 • Letter: P
Question
Presented below is information related to Hale Corporation at December 31, 2017:
Common Stock, $1 par $3,500,000
Paid-in Capital in Excess of Par—Common Stock 550,000
Preferred 8 1/2% Stock, $50 par 2,000,000
Paid-in Capital in Excess of Par—Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000
During 2018, Hale Corporation recorded the following transactions: issued 500 shares of common stock for $9,500; re-issued all treasury shares for $140,000; reported net income of $120,000; and paid cash dividends of 50,000.
The total stockholders' equity of Hale Corporation at December 31, 2018 is?
Explanation / Answer
Stockholder's equity
Particulars
Amount
Total
Capital Contributed
Common Stock at par value
3,500,000
Additional Paid in capital
550,000
Add: Common stock issued at par value
500
Add: Additional Paid in capital on common stock issued
9,000
Add: Treasury stock re-issued
140,000
Total Capital Contributed by common stock
4,199,500
Capital on Preferred Stock
Preferred 8 1/2% Stock
2,000,000
Additional Paid in capital
400,000
Total Capital Contributed by preferred stock
2,400,000
Retained Earnings
Opening Balance
1,500,000
Less: Dividends Paid
(50,000)
Add: Net Income earned in current year
120,000
Closing Balance of retained earnings
1,570,000
Total Stockholder’s Equity
8,169,500
Note: In the given case, it is assumed that treasury stock at cost of $150,000 is the stock buy back by the company in year 2017 and later in 2018 the company has re-issued all the treasury stock for $140,000.
Particulars
Amount
Total
Capital Contributed
Common Stock at par value
3,500,000
Additional Paid in capital
550,000
Add: Common stock issued at par value
500
Add: Additional Paid in capital on common stock issued
9,000
Add: Treasury stock re-issued
140,000
Total Capital Contributed by common stock
4,199,500
Capital on Preferred Stock
Preferred 8 1/2% Stock
2,000,000
Additional Paid in capital
400,000
Total Capital Contributed by preferred stock
2,400,000
Retained Earnings
Opening Balance
1,500,000
Less: Dividends Paid
(50,000)
Add: Net Income earned in current year
120,000
Closing Balance of retained earnings
1,570,000
Total Stockholder’s Equity
8,169,500