Question

Nash Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par common. At December 31, 2020, the following accounts were included in stockholders’ equity.

Preferred Stock, 148,100 shares		$ 2,962,000
Common Stock, 1,961,000 shares		9,805,000
Paid-in Capital in Excess of Par—Preferred Stock		191,000
Paid-in Capital in Excess of Par—Common Stock		27,124,000
Retained Earnings		4,537,000

The following transactions affected stockholders’ equity during 2021.

Jan. 1		28,400 shares of preferred stock issued at $24 per share.
Feb. 1		53,400 shares of common stock issued at $20 per share.
June 1		2-for-1 stock split (par value reduced to $2.50).
July 1		31,100 shares of common treasury stock purchased at $10 per share. Nash uses the cost method.
Sept. 15		9,900 shares of treasury stock reissued at $11 per share.
Dec. 31		The preferred dividend is declared, and a common dividend of 54¢ per share is declared.
Dec. 31		Net income is $2,093,000.

Prepare the stockholders’ equity section for Nash Company at December 31, 2021.

Answer 1

Answer:

Nash Company
Balance Sheet (Partial)
December 31, 2021
Stockholders' equity:
Paid-in capital:
Capital stock:
Preferred Stock	$3,530,000
Common Stock	$10,072,000
Total Capital stock		$13,602,000
Additional Capital:
Paid-in Capital in Excess of Par—Preferred Stock	$304,600
Paid-in Capital in Excess of Par—Common Stock	$27,925,000
Paid in capital in excess from treasury stock	$9,900
Total Additional Capital		$28,239,500
Total Paid-in Capital		$41,841,500
Retained earnings		$4,183,496
Total paid-in capital and Retained earnings		$46,024,996
(Less): Treasury stock		($212,000)
Total stockholders' Equity		$45,812,996

Calculations:

	Preferred stock	Common stock	Paid-in Capital in Excess of Par—Preferred Stock	Paid-in Capital in Excess of Par—Common Stock	Paid-in capital in excess from treasury stock	Retained Earnings	Treasury Stock
Beginning balance	$2,962,000	$9,805,000	$191,000	$27,124,000		$4,537,000
Jan.1	$568,000		$113,600
Feb.1		$267,000		$801,000
June 1 (no entry for stock-split)
July 1							$311,000
Sept.15					$9,900		($99,000)
Dec.31						($2,446,504)*
Dec.31						$2,093,000
Ending Balance	$3,530,000	$10,072,000	$304,600	$27,925,000	$9,900	$4,183,496	$212,000

*Dividend Calculations:

Preferred shares
Beg. Bal.	148100
Jan.1	28400
Balance 12/31	176500
Common shares
Beg. Bal.	1961000
Feb.1	53400
Balance	2014400
Stock split	2:1
Balance after stock split [2,014,400 x 2]	4028800
Treasury stock	-31100
Sale of treasury stock	9900
Balance on 12/31	4007600
Dividends
Preferred dividend [176,500 x $20 par x 8%]	$282,400
Common dividend [4,007,600 x $0.54]	$2,164,104
Total dividends	$2,446,504