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