Question

10% When Haven Corporation was incorporated in 2013, authorization was obtained to issue 200,000 shares of $5 par value common stock and 6,000 shares of 8% cumulative preferred stock. The preferred stock has a par value of $100. All the preferred stock was issued at $107 per share, and 110,000 shares of the common stock were sold for $9 per share. The operations of the company resulted in a net loss of $19,000 in 2013 and net income of $125,000 in 2014. In 2015, net income was $352,000, and the cash position was sufficient to allow the board of directors to declare a cash dividend of $1 per share to the common shareholders, as well as satisfy all preferred stock dividend requirements.

Complete in good form the stockholders' equity section of Haven Corporation's balance sheet at December 31, 2015. (Hint: First determine the total amount of dividends declared in 2015.)

Answer 1

Stockholders Equity:
8% preferred stock, 6000 shares authorized & issued at $ 100 par value	$ 600,000
Common Stock, 2000,000 shares authorized and 110,000 share issued at $ 5 par	$ 550,000
Additional Paid in Capital:
Preffered Stock	$ 42,000
Common Stock	$ 440,000
Total Paid in Capital	$ 1,632,000
Retained Earnings	$ 204,000
Total Stockholders Equity	$ 1,836,000

Working Note

Calculation of Retained Earnings

Net loss in 2013	$ (19000)
Net Income in 2014	$ 125,000
Net Income in 2015	$ 352,000
Retained Earnings 2015 beginning	$ 458,000
Less: Dividend for 2015	- $ (254,000)
Retained Earnings 2015	$ 204,000