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Part 3: Equity Transactions

Prepare the stockholders’ equity section for Reynolds Company at December 31, 2016. Show all supporting computations.

Reynolds Company has two classes of capital stock outstanding: 8%, $30 par preferred and $10 par common. At December 31, 2017, the following accounts were included in stockholders’ equity.

• Preferred Stock, 165,000 shares                               $ 4,950,000
• Common Stock, 2,200,000 shares                              22,000,000
• Paid-in Capital in Excess of Par—Preferred                     330,000
• Paid-in Capital in Excess of Par—Common                 45,100,000
• Retained Earnings                                                          8,278,600

The following transactions affected stockholders’ equity during 2018.

• Jan. 1              30,000 shares of preferred stock issued at $45 per share.
• Feb. 1              37,500 shares of common stock issued at $23 per share.
• June 1             2-for-1 stock split (par value reduced to $5.00).
• July 1               33,000 shares of common treasury stock purchased at $22 per share. Reynolds uses the cost method.
• Sept. 15           11,000 shares of treasury stock reissued at $24 per share.
• Dec. 31            The preferred dividend is declared, and a common dividend of 40¢ per share is declared.
• Dec. 31            Net income is $3,492,5000.