PROBLEMS 12 POINTS REMEMBER TO SHOW ALL YOUR WORK FOR PARTIAL CREDIT Hap Company

Question

PROBLEMS 12 POINTS REMEMBER TO SHOW ALL YOUR WORK FOR PARTIAL CREDIT Hap Company's records indicated the following account balances at December 31, 2018: Retained Earnings Unrealized Increase in Fair Value of Available-for-Sale Securities Paid-in Capital in Excess of Par on Preferred Stock Paid-in Capital in Excess of Par on Common Stock Paid-in Capital in Excess of Par from Stock Options (common) Paid-in Capital in Excess of Par from Treasury Stock Common Stock (S1 par value) Preferred Stock ($20 par value) Treasury Stock-Common (at cost) 420,000 19,000 50,000 100,000 10,000 8,000 10,000 20,000 7,000 Other Information: Common stock has 100,000 shares authorized, 10,000 shares issued & outstanding. Preferred stock pays a 10% dividend, is non-cumulative and callable at $100 per share and has 10,000 shares authorized, 1,000 shares issued & outstanding. Hap has reacquired &holds; 100 shares of its own common stock (Treasury Stock) Required: Prepare the Stockholders' Equity section of the balance sheet for Hap- in proper form, including appropriate parenthetical disclosures & subtotals. REMEMBER TO SHOW YOUR WORK FOR PARTIAL CREDIT Page 1 of 2

Explanation / Answer

1)

2)

**Market value of common shares :400*100=40000

market value of preferred shares : 100*200=20000

Total market value : 40000+20000=60000

value assigned to common shares : 75000*40000/60000= 50000

value assigned to preferred stock : 75000*20000/60000 = 25000

Paid in capital Preferred stock ($ 20 par value ) 20000 common stock ($ 1 par value ) 10000 paid in capital in excess of par on preferred stock 50000 paid in capital in excess of par on common stock 100000 paid in capital in excess of par from stock options( common ) 10000 paid in capital in excess of par fromt treasury stock 8000 Total paid in capital 198000 Retained earning 420000 Total paid in capital and Retained earning 618000 other comprehensive income 19000 less:Treasury stock (7000) stockholders equity 630000

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