Business, 12.02.2020 03:32, deehunchoo

Hatch Company has two classes of capital stock: 8%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders' equity.

Preferred Stock, 1,000,000 shares authorized, 150,000 shares outstanding $3,000,000

Common Stock, 5,000,000 shares authorized, 2,000,000 shares outstanding $10,000,000

Paid-in Capital in Excess of Par - Preferred Stock $200,000

Paid-in Capital in Excess of Par - Common Stock $27,000,000

Retained Earnings $ 4,500,000

The following transactions affected stockholders' equity during 2018.

Jan. 1 - 30,000 shares of preferred stock issued at $22 per share.

Feb. 1 - 100,000 shares of common stock issued at $20 per share.

June 1 - Declared a 5% stock dividend on the outstanding common stock when the stock is selling for $25 per share.

June 20 - Issued the stock dividend declared on June 1.

July 1 - 30,000 shares of common treasury stock purchased at $10 per share.

Sept. 15 - 10,000 shares of treasury stock reissued at $11 per share.

Dec. 31 - The preferred dividend is declared, and a common dividend at $0.50 per share is declared.

Dec. 31 - Net income is $2,100,000.

Required:

1. Prepare Journal Entries to Record the Transactions.

2. Prepare the stockholders' equity section for Hatch Company at December 31, 2018. Show all supporting computations.

Answers: 1

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Hatch Company has two classes of capital stock: 8%, $20 par preferred and $5 par common. At December...