The stockholders equity accounts of Hashmi Company at

January 1
The stockholders’ equity accounts of Hashmi Company at January 1, 2010, are as
follows.Preferred Stock, 6%, $50 par ............ $600,000Common Stock, $5 par ...............
800,000Paid-in Capital in Excess of Par Value—Preferred Stock ... 200,000Paid-in Capital in
Excess of Par Value—Common Stock ... 300,000Retained Earnings .................. 800,000There
were no dividends in arrears on preferred stock. During 2010, the company had the following
transactions and events.July 1 Declared a $0.50 cash dividend on common stock.Aug. 1
Discovered $25,000 understatement of 2009 depreciation. Ignore income taxes.Sept. 1 Paid the
cash dividend declared on July 1.Dec. 1 Declared a 10% stock dividend on common stock when
the market value of the stock was $18 per share.15 Declared a 6% cash dividend on preferred
stock payable January 15, 2011.31 Determined that net income for the year was $355,000.31
Recognized a $200,000 restriction of retained earnings for plant expansion.Instructions(a)
Journalize the transactions, events, and closing entry.(b) Enter the beginning balances in the
accounts, and post to the stockholders’ equity accounts.(c) Prepare a retained earnings
statement for the year.(d) Prepare a stockholders’ equity section at December 31, 2010.View
Solution:
The stockholders equity accounts of Hashmi Company at January 1
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