Hessenland Corporation had the following shareholders’ equity at January 1, 2012.
Preferred shares, 8%, $100 par value, 10,000 shares authorized,
4,000 shares issued................... $ 400,000
Common shares, $2 par value, 200,000 shares authorized,
80,000 shares issued ................. 160,000
Common shares subscribed, 10,000 shares ......... 20,000
Contributed surplus—preferred .............. 20,000
Contributed surplus—common ............. 940,000
Retained earnings .................. 780,000
2,320,000
Less: Common share subscriptions receivable ...... 40,000
Total shareholders’ equity .............. $2,280,000
During 2012, the following transactions occurred.
1. Equipment was purchased in exchange for 100 shares of common. The shares’ market value on the exchange date was $12 per share.
2. Sold 1,000 shares of common and 100 shares of preferred for the lump sum price of $24,500. The common shares had a market price of $14 at the time of the sale.
3. Sold 2,000 shares of preferred for cash at $102 per share.
4. All of the subscribers paid their subscription prices into the firm.
5. The common shares were issued.
6. Repurchased and retired 1,000 common shares at $15 per share.
7. Income for 2008 was $246,000.
Instructions
Prepare the shareholders’ equity section for the company as at December 31, 2012. (The use of T accounts may help you organize the material.)