Hawkins Laboratory International Corporation (Hawkins) has recently asked you to design and implement an accounting system...

 
 
 

 

Transcribed Image Text:

Hawkins Laboratory International Corporation ("Hawkins") has recently asked you to design and implement an accounting system in Excel that separately maintains its stockholders equity accounts. Hawkins has two classes of shares: 1) 5% preferred with a $10 par value, and 2) common with a $1 par value. While this sounds like a big, complicated job, you readily accepted its offer to pay you $400,000 for your hard work. To begin, you first asked Hawkins' CFO, Mrs. Wheeler for electronic copies of all general ledger entries pertaining to stockholders' equity to date, plus all previous Statements of Shareholders' Equity to date. Mrs. Wheeler informed you that literally all of Hawkins' books and records were recently destroyed in an unfortunate office fire. The only piece of information she was able to provide was a paper copy of Hawkins Statement of Shareholders' Equity for 2015, and 2016 Mrs. Wheeler was able to recall the following transactions that occurred during 2017: 1/1/17: Issued 400,000 shares of common stock at $31 per share. The underwriter charged a 3% fee issuing the shares. 1/1/17: Issued 500,000 shares of its preferred stock at $40 per share. The shares were privately placed and Hawkins did not pay share issue costs. 3/1/17: Purchased 220,000 shares of common stock at $35 per share. 6/30/17: Declared a $450,000 dividend for the first half of the year. 7/1/17: Sold 105,000 of the treasury shares at $44 per share (the company uses the FIFO method when determining par value of sold treasury shares) 7/15/17: Paid the cash dividend. 9/1/17: Declared a distributed a property dividend of shares of stock in Byers Corp. Hawkins' purchased 3,570,000 shares of Byers Corp in 2016 for $28,560,000. On 9/1/17, shares of Byers Corp. were trading at $1.50 per share. 12/31/17: Hawkins reported net income of $5,325,691 (which includes the effects of any transactions listed above. Required Remember that your task is to generate an accounting system that maintains stockholders accounts. To do so, you must complete the following steps: equity 1. use journal entries to establish beginning balances for each of the shareholders equity accounts as of 1/1/2015. Assume the only asset on Hawkins balance sheet was cash. 2. prepare journal entries for the events and transactions that affected Stockholders' Equity during 2015 and 2016. 3. prepare journal entries for the events Mrs. Wheeler recalled from 2017. 4. prepare T-accounts for each stockholders equity account. The numbers in the T-accounts should not be hard-keyed, rather they should be linked to the numbers in journal entries. Excel formulas should compute ending balances. 5. prepare the comparative Statement of Stockholders' Equity, the stockholders equity section of the Balance Sheet, and comparative basic EPS for years ended 2016 and 2017. The numbers on the statements should not be hard keyed (where applicable); rather, they should reference cells from the previous tabs. Balance at January 1, 2015 Common Shares Share repurchase (83,500 shares) Cash dividend Net Income Balance at December 31, 2015 Cash dividend, common Stock dividend -5 for 4 Net Income Balance at December 31, 2016 HAWKINS LABORATORY INTERNATIONAL CORPORATION Statement of Shareholders' Equity Common Stock $1 par 354,000 370,000 724,000 181,000 905,000 Additional Paid-in Capital 10,415,000 12,210,000 22,625,000 22,625,000 Retained Earnings 2,761,044 (50,000) 2,696 789 5,407,833 (75,000) (181,000) 3,805,617 8,957,450 Treasury Stock (1,670,000) (1,670,000) (1,670,000) Total Shareholders' Equity 13,530,044 27,086,833 31,817,450 Hawkins Laboratory International Corporation ("Hawkins") has recently asked you to design and implement an accounting system in Excel that separately maintains its stockholders equity accounts. Hawkins has two classes of shares: 1) 5% preferred with a $10 par value, and 2) common with a $1 par value. While this sounds like a big, complicated job, you readily accepted its offer to pay you $400,000 for your hard work. To begin, you first asked Hawkins' CFO, Mrs. Wheeler for electronic copies of all general ledger entries pertaining to stockholders' equity to date, plus all previous Statements of Shareholders' Equity to date. Mrs. Wheeler informed you that literally all of Hawkins' books and records were recently destroyed in an unfortunate office fire. The only piece of information she was able to provide was a paper copy of Hawkins Statement of Shareholders' Equity for 2015, and 2016 Mrs. Wheeler was able to recall the following transactions that occurred during 2017: 1/1/17: Issued 400,000 shares of common stock at $31 per share. The underwriter charged a 3% fee issuing the shares. 1/1/17: Issued 500,000 shares of its preferred stock at $40 per share. The shares were privately placed and Hawkins did not pay share issue costs. 3/1/17: Purchased 220,000 shares of common stock at $35 per share. 6/30/17: Declared a $450,000 dividend for the first half of the year. 7/1/17: Sold 105,000 of the treasury shares at $44 per share (the company uses the FIFO method when determining par value of sold treasury shares) 7/15/17: Paid the cash dividend. 9/1/17: Declared a distributed a property dividend of shares of stock in Byers Corp. Hawkins' purchased 3,570,000 shares of Byers Corp in 2016 for $28,560,000. On 9/1/17, shares of Byers Corp. were trading at $1.50 per share. 12/31/17: Hawkins reported net income of $5,325,691 (which includes the effects of any transactions listed above. Required Remember that your task is to generate an accounting system that maintains stockholders accounts. To do so, you must complete the following steps: equity 1. use journal entries to establish beginning balances for each of the shareholders equity accounts as of 1/1/2015. Assume the only asset on Hawkins balance sheet was cash. 2. prepare journal entries for the events and transactions that affected Stockholders' Equity during 2015 and 2016. 3. prepare journal entries for the events Mrs. Wheeler recalled from 2017. 4. prepare T-accounts for each stockholders equity account. The numbers in the T-accounts should not be hard-keyed, rather they should be linked to the numbers in journal entries. Excel formulas should compute ending balances. 5. prepare the comparative Statement of Stockholders' Equity, the stockholders equity section of the Balance Sheet, and comparative basic EPS for years ended 2016 and 2017. The numbers on the statements should not be hard keyed (where applicable); rather, they should reference cells from the previous tabs. Balance at January 1, 2015 Common Shares Share repurchase (83,500 shares) Cash dividend Net Income Balance at December 31, 2015 Cash dividend, common Stock dividend -5 for 4 Net Income Balance at December 31, 2016 HAWKINS LABORATORY INTERNATIONAL CORPORATION Statement of Shareholders' Equity Common Stock $1 par 354,000 370,000 724,000 181,000 905,000 Additional Paid-in Capital 10,415,000 12,210,000 22,625,000 22,625,000 Retained Earnings 2,761,044 (50,000) 2,696 789 5,407,833 (75,000) (181,000) 3,805,617 8,957,450 Treasury Stock (1,670,000) (1,670,000) (1,670,000) Total Shareholders' Equity 13,530,044 27,086,833 31,817,450

Answer rating: 100% (QA)

1 1 Entry to establish the balances of each of the stockholders equity accounts as at Jan1 2015 Date ... View the full answer