Problem 15-12 Nash Company was formed on July 1, 2015. It was authorized toissue 296,200 shares of $10 par value common stock and 104,100shares of 7% $25 par value, cumulative and nonparticipatingpreferred stock. Nash Company has a July 1–June 30 fiscalyear.
The following information relates to the stockholders’ equityaccounts of Nash Company.
Common Stock
Prior to the 2017–2018 fiscal year, Nash Company had 114,200 sharesof outstanding common stock issued as follows.
| 1. | | 89,000 shares were issued for cash on July 1, 2015, at $31 pershare. | | 2. | | On July 24, 2015, 5,000 shares were exchanged for a plot ofland which cost the seller $71,800 in 2009 and had an estimatedfair value of $211,200 on July 24, 2015. | | 3. | | 20,200 shares were issued on March 1, 2016, for $41 pershare. |
During the 2017–2018 fiscal year, the following transactionsregarding common stock took place.
| November 30, 2017 | | Nash purchased 2,100 shares of its own stock on the open marketat $42 per share. Nash uses the cost method for treasurystock. | | December 15, 2017 | | Nash declared a 5% stock dividend for stockholders of record onJanuary 15, 2018, to be issued on January 31, 2018. Nash was havinga liquidity problem and could not afford a cash dividend at thetime. Nash’s common stock was selling at $48 per share on December15, 2017. | | June 20, 2018 | | Nash sold 540 shares of its own common stock that it hadpurchased on November 30, 2017, for $25,000. |
Preferred Stock
Nash issued 41,500 shares of preferred stock at $47 per share onJuly 1, 2016.
Cash Dividends
Nash has followed a schedule of declaring cash dividends inDecember and June, with payment being made to stockholders ofrecord in the following month. The cash dividends which have beendeclared since inception of the company through June 30, 2018, areshown below.
Declaration
Date | | Common
Stock | | Preferred
Stock | | 12/15/16 | | $0.30 per share | | $1 per share | | 6/15/17 | | $0.30 per share | | $1 per share | | 12/15/17 | | | | $1 per share |
No cash dividends were declared during June 2018 due to thecompany’s liquidity problems.
Retained Earnings
As of June 30, 2017, Nash’s retained earnings account had a balanceof $666,300. For the fiscal year ending June 30, 2018, Nashreported net income of $39,900.
Prepare the stockholders’ equity section of the balance sheet, forNash Company as of June 30, 2018, as it should appear in its annualreport to the shareholders.
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