PROBLEM 15-1

(a)
January 11
Cash (20,000 X $16).................................................................................... 320,000
Common Stock (20,000 X $10) ........................................................
200,000
Paid-in Capital in Excess of Par—Common
   Stock...............................................................................................
120,000

February 1
Equipment.................................................................................................... 50,000
Buildings...................................................................................................... 160,000
Land ..............................................................................................270,000
Preferred Stock (4,000 X $100).........................................................
400,000
Paid-in Capital in Excess of Par—Preferred
   Stock...............................................................................................
80,000

July 29
Treasury Stock (1,800 X $17)...................................................................... 30,600
Cash...................................................................................................
30,600

August 10
Cash (1,800 X $14)...................................................................................... 25,200
Retained Earnings (1,800 X $3)................................................................... 5,400*
Treasury Stock...................................................................................
30,600

*(The debit is made to Retained Earnings because no Paid-in Capital *from Treasury Stock
exists.)

December 31
Retained Earnings........................................................................................ 37,000
Dividend Payable...............................................................................
37,000*

*Common Stock Cash Dividend:

Common shares outstanding 20,000
Common cash dividend X $.25
$5,000

Preferred Stock Cash Dividend: 4,000 X 100 X 8% = $32,000

Total cash dividends: $5,000 + $32,000 = $ 37,000

December 31
 Income Summary......................................................................................... 175,700
Retained Earnings.............................................................................. 175,700

(b) PHELPS CORPORATION

Stockholders’ Equity
December 31, 2014

Capital stock
Preferred stock—par value $100 per share,
   8% cumulative and nonparticipating,
   5,000 shares authorized,
   4,000 shares issued and outstanding.............................................. $400,000
Common stock—par value $10 per share,
   50,000 shares authorized,
   20,000 shares issued and outstanding............................................ 200,000
Total capital stock................................................................. 600,000
Additional paid-in capital
In excess of par—preferred............................................................... $ 80,000
In excess of par—common............................................................... 120,000
200,000
Total paid-in capital..............................................................
800,000
Retained earnings 133,300*
Total stockholders’ equity.....................................................
$933,300

*($175,700 – $5,400 – $37,000)

PROBLEM 15-2

(a) Feb. 1 Treasury Stock ($19 X 2,000)............................................. 38,000

Cash.......................................................................
38,000

Mar. 1 Cash ($17 X 800)................................................................ 13,600

Retained Earnings ($2 X 800)............................................. 1,600
Treasury Stock ($19 X 800)...................................
15,200

Mar. 18 Cash ($14 X 500)................................................................ 7,000

Retained Earnings ($5 X 500)............................................. 2,500
Treasury Stock ($19 X 500)...................................
9,500

Apr. 22 Cash ($20 X 600)................................................................ 12,000

Treasury Stock ($19 X 600)...................................
11,400
Paid-in Capital from Treasury
Stock.................................................................. 600
(b) CLEMSON COMPANY
Stockholders’ Equity
April 30, 2014

Common stock, $5 par value, 20,000 shares

issued, 19,900 shares outstanding............................................................ $100,000
Paid-in capital in excess of par—
common stock.......................................................................................... 300,000
Paid-in capital from treasury stock.............................................................. 600
Total paid-in capital..................................................................... 400,600
Retained earnings*....................................................................................... 445,900
846,500
Less: Treasury stock (100 shares)**........................................................... 1,900
Total stockholders’ equity............................................................ $844,600

*Retained earnings (beginning balance)...................................................... $320,000

March 1 reissuance..................................................................................... (1,600)
March 18 reissuance................................................................................... (2,500)
Net income for period................................................................................. 130,000
Retained earnings (ending balance)............................................................ $445,900

**Treasury stock (beginning balance)......................................................... $ 0

February 1 purchase (2,000 shares)........................................................... 38,000
March 1 sale (800 shares)......................................................................... (15,200)
March 18 sale (500 shares)....................................................................... (9,500)
April 12 sale (600 shares)......................................................................... (11,400)
Treasury stock (ending balance)............................................................... $ 1,900

PROBLEM 15-3

HATCH COMPANY
Stockholders’ Equity
December 31, 2014

Capital Stock
Preferred stock, $20 par,
   8%, 180,000 shares issued
   and outstanding........................................................................ $
3,600,000
Common stock, $2.50 par,
   4,100,000 shares issued,
   4,080,000 shares outstanding...................................................
10,250,000
Total capital stock............................................................
13,850,000

Additional paid-in capital

In excess of par—preferred......................................................... $ 260,000
In excess of par—common......................................................... 27,750,000
 From treasury stock.................................................................... 10,000
28,020,000
Total paid-in capital.........................................................
41,870,000
Retained earnings..................................................................................
4,272,000
Total paid-in capital and retained earnings............................................
46,142,000
Less: Treasury stock
(20,000 shares common).........................................................
200,000
Total stockholders’ equity................................................
$45,942,000

Supporting balances are indicated in the following T-Accounts.

Preferred Stock
 Bal. 3,000,000 Common Stock
1. 600,000  Bal. 10,000,000
3,600,000  3. 250,000
  10,250,000
Paid-in Capital in Excess of
Par—Common Stock Retained Earnings
 Bal. 27,000,000  Bal. 4,500,000
4. 750,000 8. 288,000   10. 2,100,000
27,750,000 9. 2,040,000 
4,272,000

Paid-in Capital in Excess of Par—Preferred Stock

 Bal. 200,000
Treasury
 2.Stock 60,000 Paid-in Capital from Treasury Stock
 5. 300,000   6. 100,000
260,000  7. 10,000
200,000 
10,000

1. Jan. 1 30,000 X $20 7. Sept. 15 10,000 X $1

2. Jan. 1 30,000 X $2 8. Dec. 31 3,600,000 X 8%
3. Feb. 1 50,000 X $5 9. Dec. 31 4,080,000* X 50¢
4. Feb. 1 50,000 X $15 *[(2,000,000 + 50,000) X 2] – 30,000 + 10,000
5. July 1 30,000 X $10 10. Dec. 31 Net income
6. Sept. 15 10,000 X $10

PROBLEM 15-4

-1-
Cash .............................................................................................................10,000
Discount on Bonds Payable....................................................................................... 106
Bonds Payable................................................................................................
10,000
Preferred Stock............................................................................................... 50
Paid-in Capital in Excess of Par—Preferred
    Stock ($106 – $50)...................................................................................... 56

-2-
Equipment (500 X $16)............................................................................................. 8,000
Common Stock...............................................................................................
5,000
Paid-in Capital in Excess of Par—Common
   Stock............................................................................................................
3,000

(Assuming the stock is regularly traded, the value

of the stock would be used.) If the stock is not
regularly traded, the equipment would be recorded
at its estimated fair value.

-3-
Cash .............................................................................................................10,800
Preferred Stock...............................................................................................
5,000
Paid-in Capital in Excess of Par—Preferred
   Stock ($5,974 – $5,000).............................................................................. 974
Common Stock...............................................................................................
3,750
Paid-in Capital in Excess of Par—Common
   Stock ($4,826 – $3,750)..............................................................................
1,076

Fair value of common (375 X $14) $ 5,250

Fair value of preferred (100 X $65) 6,500
Aggregate $11,750

$5,250
Allocated to common: $11,750 X $10,800 = $ 4,826

$6,500
Allocated to preferred: $11,750 X $10,800 = 5,974
Total allocated $10,800
-4-

Equipment................................................................................................................. 6,500
Preferred Stock...............................................................................................
2,500
Paid-in Capital in Excess of Par—Preferred
   Stock ($3,300 – $2,500).............................................................................. 800
Common Stock...............................................................................................
2,000
Paid-in Capital in Excess of Par—Common
   Stock ($3,200 – $2,000)..............................................................................
1,200

Fair value of equipment $6,500

Less: Market value of common stock (200 X $16) 3,200
 Total value assigned to preferred stock $3,300

PROBLEM 15-5

(a) Treasury Stock (380 X $40).................................................................. 15,200

Cash........................................................................................... 15,200

(b) Treasury Stock (300 X $45).................................................................. 13,500

Cash........................................................................................... 13,500

(c) Cash (350 X $42).................................................................................. 14,700

Treasury Stock (350 X $40)....................................................... 14,000
Paid-in Capital from Treasury Stock
   (350 X $2)............................................................................... 700

(d) Cash (110 X $38).................................................................................. 4,180

Paid-in Capital from Treasury Stock..................................................... 620
Treasury Stock........................................................................... 4,800
*

*30 shares purchased at $40 = $1,200

80 shares purchased at $45 = 3,600
(Cost of treasury shares sold using FIFO = $4,800

PROBLEM 15-6

(a) -1-
Treasury Stock (280 X $97).............................................................................. 27,160
Cash........................................................................................................
27,160

-2-
Retained Earnings............................................................................................. 90,400
Dividends Payable [(4,800 – 280) X $20]...............................................
90,400

-3-
Dividends Payable............................................................................................ 90,400
Cash........................................................................................................
90,400

-4-
Cash (280 X $102)............................................................................................ 28,560
Treasury Stock........................................................................................
27,160
Paid-in Capital from Treasury Stock (280 X $5)...................................... 1,400
-5-
Treasury Stock (500 X $105)............................................................................ 52,500
Cash........................................................................................................
52,500
 -6-
Cash (350 X $96).............................................................................................. 33,600
Paid-in Capital from Treasury Stock................................................................. 1,400
Retained Earnings............................................................................................. 1,750
Treasury Stock (350 X $105)................................................................. 36,750

(b) WASHINGTON COMPANY

Stockholders’ Equity
December 31, 2015

Common stock, $100 par value, authorized

8,000 shares; issued 4,800 shares,
4,650 shares outstanding..................................................................... $480,000
Retained earnings (restricted in the
amount of $15,750* by the acquisition of
treasury stock).................................................................................... 295,850**
Total paid-in capital and
retained earnings...................................................................... 775,850
Less: Treasury stock (150 shares).......................................................... 15,750
Total stockholders’ equity............................................................ $760,100
*($52,500 – $36,750)
**($294,000 – $90,400 – $1,750 + $94,000)