On Jan 1, the Harrison Corp. had the following stockholders\' equity accounts: C

Question

On Jan 1, the Harrison Corp. had the following stockholders' equity accounts:

Common stock ($20 par value, 1,000,000 shares authorized, 200,000 shares issued)-$4,000,000

Paid in capital in excess of par value-$1,400,000

Retained earnings-$4,560,000

Tresury stock (12,000 shares single purchase)-($360,000)

1. Jan 10

Declared a 5% stock dividend (only for outstanding stock) to be distributed on February 15.(Market value on the date of declaration was $24)

2. April 15

Declared a $0.60 per share cash dividend to stockholders of record on April 30, distributable on May 15.

3. July 1

Announced a 2-for 1 stock split, The market price per share just prior to the split was $22. The stockholders of record will be immediate. Any transfer of certificates will take place on or by July 31.

4. Sept 1

sold one half of all our treasury stock for $15

5. Dec 1

Declared a $0.50 per share cash dividend to stockholders of record on Jan 5, payable to stockholders on Jan 15.

6. Dec 31.

After adjusting entries and the first two closing entries the Income Summary account has a credit balance of $250,000

Questions: a. Par value-common stock

b. # of shares authorized

c. # of shares issued

d. # of shares outstanding

e. total balance of the common stock account

f. balance of paid in capital-excess of par value

g. balance of retained earning

h. total liabilities surrounding stockholders and their rights

Explanation / Answer

a) Par Value Common Stock = $10

b) No of shares authorized = 2,000,000

c) No of shares issued = 418,800

d) No of shares outstanding = 418,800 - 12,000 = 406,800

e) total balance of the common stock account = $4,188,000

f) paid in capital in excess of par = $1,437,600

g) balance of retained earning = $4,262,560

h) total liabilities surrounding stockholders and their rights.= 9,708,160

Calculations in tabular form are shown below:

no of paid in common common excess of treasury retained total treasury stock shares stock par stock earnings equity stock nos beginning balance 200000 4000000 1400000 -360000 4560000 9600000 12000 5% stock dividend 9400 188000 37600 -225600 0 209400 4188000 1437600 -360000 4334400 9600000 12000 cash dividend -118440 -118440 209400 4188000 1437600 -360000 4215960 9481560 12000 2 for 1 stock split 209400 12000 418800 4188000 1437600 -360000 4215960 9481560 24000 sale of treasury stock 0 180000 180000 12000 418800 4188000 1437600 -180000 4215960 9661560 12000 cash dividend -203400 -203400 income summary 250000 250000 418800 4188000 1437600 -180000 4262560 9708160 12000

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