Instructions You've been hired to perform an audit of Hubbard Company for the year ended December 31, 2019. You find the following account balances related to shareholders' equity: Preferred stock, $100 par $27,000 Common stock, $10 par 61,000 (15,600) 152,000 Capital surplus Retained earnings Because of the antiquated terminology and negative balance, you examine the Capital Surplus account and find the following entries: Credit (Debit) Additional paid-in capital on common stock Capital from donated land $26,200 16,500 Treasury stock (550 common shares at cost) (8,250) Additional paid-in capital on preferred stock 3,400 Stock dividend (50%) (19,000) Prior period adjustment (net of income taxes) (13,900) Loss from fire (uninsured), 2018 (19,000) Property dividend declared Cash dividends declared Balance $ (44,650) (5,800) (24,200) Your examination of the Preferred Stock and Common Stock accounts reveals that the amounts shown correctly state the total par value of the issued capital stock. The Retained Earnings account contains the accumulated earnings of the company, with the exception of any items of retained earnings that were inappropriately debited or credited to the Capital Surplus account. Required: 1. Prepare whatever journal entries are necessary to eliminate the Capital Surplus account and to correct Hubbard's shareholders' equity accounts 2. Prepare a corrected shareholders' equity section of Hubbard's December 31, 2019, balance sheet Include any related notes to its financial statements. Chart of Accounts ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance CHART OF ACCOUNTS Hubbard Company General Ledger REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 181 Equipment 512 Utilities Expense 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense EQUITY 300 Capital Surplus 305 Preferred Stock 311 Common Stock 321 Additional Paid-in Capital on Preferred Stock 322 Additional Paid-in Capital on Common Stock 329 Unrealized Capital from Donation of Land 331 Retained Earnings 335 Treasury Stock Labels and Amount Descriptions Labels Contributed Capital Amount Descriptions Total contributed capital Total contributed capital, retained earnings, and unrealized capital Total shareholders' equity Balance Sheet 2. Prepare a corrected shareholders' equity section of Hubbard's December 31, 2019, balance sheet. Include any related notes to its financial statements. Balance Sheet Instructions HUBBARD COMPANY Score: 60/101 Shareholders' Equity December 31, 2019 (Label) 2 Preferred stock $26,000.00 3 Common stock 62,000.00 4 Additional paid-in capital on preferred stock 3,300.00 5 Additional paid-in capital on common stock 29,700.00 6 Total contributed capital $121,000.00 7 Retained earnings 75,000.00 Unrealized capital from donation of land 16,400.00 9 Total contributed capital, retained eamings, and unrealized capital $212,400.00 10 Less: Treasury stock (8,400.00) Total shareholders' equity $204,000.00 Shada