1 answer

Problem 8-5 On December 31, 2016, Wildhorse Co. had 1,375,000 shares of $7 par common stock...

Question:

Problem 8-5 On December 31, 2016, Wildhorse Co. had 1,375,000 shares of $7 par common stock issued and outstanding. At Decemb

Problem 8-5 On December 31, 2016, Wildhorse Co. had 1,375,000 shares of $7 par common stock issued and outstanding. At December 31, 2016, stockholders' equity had the amounts listed here. Common Stock Additional Paid-in Capital Retained Earnings $9,625,000 1,910,000 1,295,000 Transactions during 2017 and other information related to stockholders' equity accounts were as follows. 1. On January 10, 2017, issued at $109 per share 117,000 shares of $104 par value, 8% cumulative preferred stock. 2. On February 8, 2017, reacquired 17,100 shares of its common stock for $12 per share. 3. On May 9, 2017, declared the yearly cash dividend on preferred stock, payable June 10, 2017, to stockholders of record on May 31, 2017. 4. On June 8, 2017, declared a cash dividend of $1.70 per share on the common stock outstanding, payable on July 10, 2017, to stockholders of record on July 1, 2017. 5. Net income for the year was $3,587,000. Prepare the stockholders' equity section of Wildhorse balance sheet at December 31, 2017.

Answers

WILDHORSE COMPANY

Partial Balance Sheet

December 31, 2017

Stockholders’ equity

Paid-in capital

Capital stock

Preferred stock

12168000

Common stock

9625000

Total capital stock

21793000

Additional paid-in capital

Paid in capital in excess of par value -preferred stock

585000

Paid in capital in excess of par value -common stock

1910000

Total additional paid-in capital

2495000

Total paid-in capital

24288000

Retained earnings

2573570

Total paid-in capital and retained earnings

26861570

Less:   Treasury stock

(205200)

Total stockholders’ equity

$26656370

Preferred stock = 117000*104 = 12168000

In excess of par value -preferred stock = 117000*(109-104) = 585000

Retained earnings = 1295000+3587000-((1375000-17100)*1.70) = 2573570

Treasury stock = 17100*12 = 205200

.

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