Exercise 15-18 Pharoah Company reported the following amounts in the stockholder

Question

Exercise 15-18

Pharoah Company reported the following amounts in the stockholders’ equity section of its December 31, 2016, balance sheet.

During 2017, Pharoah took part in the following transactions concerning stockholders’ equity.

7.Declared the annual 2017 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2018.

Preferred stock, 10%, $100 par (10,000 shares authorized, 2,200 shares issued) $220,000 Common stock, $5 par (95,500 shares authorized, 19,100 shares issued) 95,500 Additional paid-in capital 136,000 Retained earnings 455,000    Total $906,500 Prepare the December 31, 2017, stockholders' equity section. Assume 2017 net income was $314,000. (Enter account name only. Do not provide any descriptive information) PHAROAH COMPANY Stockholders Equity December 31, 2017 Preferred Stock $266000 Common Stock Total Capital Stock Additional Paid-in Capital Total Paid-in Capital Retained Earnings Total Paid-in Capital and Retained Earnings Less : Treasury Stock Total Stockholders' Equity

Explanation / Answer

PHAROAH COMPANY Stockholders' Equity December 31, 2017 Capital Stock Preferred Stock                 266,000 Common Stock                 104,600 Total Capital Stock                 370,600 Additional Paid-in-Capital                 212,100 Total Paid-in-Capital                 582,700 Retained Earnings                 620,460 Total Paid-in-Capital & Retained Earnings             1,203,160 Less: Treasury Stock                 (37,800) Total Stockholders' Equity             1,165,360 Statement of Stockholders' Equity Preferred Stock Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock Total Beginning Balance - Jan 1, 2017                 220,000                 95,500               136,000               455,000                     -                    906,500 Purchase Treasury Stock - 1,700 Shares          (71,400)                  (71,400) Reissue Treasury Stock - 800 Shares                   1,000            33,600                     34,600 Issue of Preferred Stock                   46,000                   2,300                     48,300 Stock Dividend declared & Paid                   9,100                 72,800               (81,900)                              -   Annual Dividend Declared                             -                            -                            -                 (66,640)                  (66,640) Net Income - 2017                             -                            -                            -                 314,000                     -                    314,000 Ending Balance - Dec 31, 2017                 266,000               104,600               212,100               620,460          (37,800)               1,165,360 Stock Dividend Issued = 10% X (19,100 Shares - 1,700 Shares + 800 Shares) = 1,820 Shares Value of Stock Dividend = 1,820 Shares X $45 = $81,900 Dividend Declared: Preferred Stock - 2,660 Shares X $10                   26,600 Common Stock - 20,020 Shares X $2                   40,040 Total Dividend Payable                   66,640

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