Question

Please detail the correct solution in each box.

b. Prepare the stockholders' equity section of the balance sheet as of December 31, 2015 assuming that the net income for the year was $10,000,000 HOUGHTON COMPANY Stockholders' Equity Balance Sheet as of 12/31/2015 Total Stockholders' Equilty

Houghton Company began business on January 1, 2015 by issuing all of its 1,750,000 authorized shares of its $1 par value common stock for $34 per share. On June 30, Houghton declared a cash dividend of $2.25 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 350,000 of its own shares of stock for $39 per share. On December 22, Houghton resold 175,000 of these shares for $45 per share.

Answer 1

HOUGHTON COMPANY
Stockholders' Equity
Balance Sheet as of 12/31/2015
Common stock	1750000
Paid-in capital in excess of par-common	57750000
Paid-in capital from treasury stock	1050000
Retained earnings	6062500
Total paid-in capital	66612500
Less: Treasury stock (at cost)	-6825000
Total stockholders' equity	59,787,500

Working:

Paid-in capital in excess of par-common = (1750000 x $34)-1,750,000 = 57750000

Dividends = (1750000 x $2.25)

Paid-in capital from treasury stock = (175000 x $45)- (175000 x $39) = 1050000

Retained earnings = Net income $10,000,000 - Dividends $3,937,500 = $6,062,500.

Treasury stock = (175000 x $39) = 6825000