In 2017, the Hicklien Corporation was formed. The corporate charter authorizes t
ID: 2604338 • Letter: I
Question
In 2017, the Hicklien Corporation was formed. The corporate charter authorizes the issuance of 10,000,000 shares of $1 par value common stock, and 4,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. The following selected transactions took place in 2017:
>1,200,000 shares of common stock were issued for cash. The market price of the stock was $10 per shares.
>25,000 shares of common stock were issued for land. The asking price of the land was $270,000. The fair value of the land was $239,500.
>200,000 shares of preferred stock were issued for cash. The market price of the stock was $95.
>10,000 shares of common stock were issued to attorneys in payment of their bill for $35,000 of services performed during the company’s organization.
>5,000 shares of preferred stock were issued for cash. The market price of the stock was $100
>15,000 shares of preferred stock were issued for machinery and equipment. The fair value of the machinery and equipment was $1,650,000. The stock was selling in the market at $102 per share.
INSTRUCTIONS:
Prepare a stockholders’ equity section of the Hicklien Corporation balance sheet dated December 31, 2017. Include full disclosure.
Explanation / Answer
stockholders’ equity section of the Hicklien Corporation balance sheet dated December 31, 2017. Stock holders Equity Amount in $ Amount in $ Paid in capital preferred stock $5 par value 4000,000 Shares authorised, 220,000 Sahres are issued and outstanding $1,100,000 Common Stock $1 par , 10,000,000 Authorised, 1,235,000 Shares are issued and outstanding $1,235,000 Total capital Stock $2,335,000 Additional paid in capital In execess of par value -- preferred Stock $20,050,000 In execess of par value -- Common Stock $11,039,500 Total Additional paid in capital $31,089,500 Total paid in capital $33,424,500 Retained earnings $0 Total paid in capital And retained Earnings $33,424,500 Less: trasury Stock $0 Total Stock holders equity $33,424,500 Working notes Common Stock paid in capital inexcess of par value - Common Stock Preferred Stock paid in capital inexcess of par value - Preferred Stock 1 1,200,000 shares of common stock were issued for cash. The market price of the stock was $10 per shares. $ 12,00,000 $ 1,08,00,000 (1200,000*$1) (1200,000*($10-$1)) 2 25,000 shares of common stock were issued for land. The asking price of the land was $270,000. The fair value of the land was $239,500. $ 25,000.00 $ 2,14,500.00 (25000*$1) ($239500-25000) 3 200,000 shares of preferred stock were issued for cash. The market price of the stock was $95 $ 10,00,000.00 $ 1,80,00,000.00 (200,000*$5 (200,000*($95-$5) 4 10,000 shares of common stock were issued to attorneys in payment of their bill for $35,000 of services performed during the company’s organization $ 10,000.00 $ 25,000.00 (10,000*$1) ($35000-$10,000) 5 5,000 shares of preferred stock were issued for cash. The market price of the stock was $100 $ 25,000.00 $ 4,75,000.00 (5000*$5) (5000*($100-$5) 6 15,000 shares of preferred stock were issued for machinery and equipment. The fair value of the machinery and equipment was $1,650,000. $ 75,000.00 $ 15,75,000.00 (15000*$5) ($1650,000-75000) Amount $ 12,35,000.00 $ 1,10,39,500.00 $ 11,00,000.00 $ 2,00,50,000.00 $ 3,34,24,500.00 Number of Shares issued 1235000 220000