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    Post entries, prepare a retained earnings & stockholders' equity

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    The stockholders' equity accounts of Hashmi Company at January 1, 2008, are as follows.

    Preferred Stock, 6%, $50 par $600,000
    Common Stock, $5 par 800,000
    Paid-in Capital in Excess of Par Value-Preferred Stock 200,000
    Paid-in Capital in Excess of Par Value-Common Stock 300,000
    Retained Earnings 800,000

    There were no dividends in arrears on preferred stock. During 2008, 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 2007 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.
    Dec. 15 Declared a 6% cash dividend on preferred stock payable January 15, 2009.
    Dec. 31 Determined that net income for the year was $355,000.
    Dec. 31 Recognized a $200,000 restriction of retained earnings for plant expansion.

    Enter the beginning balances in the accounts, and post to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (If answer is zero, please enter 0, do not leave any fields blank.)

    Prepare a retained earnings statement for the year. (List multiple entries in descending order of amount.)

    Prepare a stockholders' equity section at December 31, 2008.

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    Solution Summary

    The solution examines post entries, and prepares a retained earnings and stockholders' equity.