In: Accounting
The general ledger of Marshall Corporation, a publicly traded
company, contained the following shareholders’ equity accounts in
2018:
January 1 | December 31 | ||||
Preferred shares (10,500 and 21,600 shares issued, respectively) | $525,000 | $1,080,000 | |||
Common shares (336,000 and 364,000 shares issued, respectively) | 2,688,000 | 3,248,000 | |||
Stock dividends distributable | 0 | 400,400 | |||
Retained earnings | 3,222,000 | 3,658,600 |
A review of the accounting records for the year ended December 31,
2018, reveals the following information:
1. | On January 1, 11,100 additional $5 noncumulative preferred shares were issued for $50 each. An unlimited number are authorized. | |
2. | On October 1, 28,000 common shares were sold for cash at $20 per share. An unlimited number are authorized. | |
3. | The annual preferred shareholders’ cash dividend was declared and paid during the year. | |
4. | On December 31, a 5% stock dividend was declared on common shares when the share price was $22. The stock dividend is distributable on January 20. | |
5. | Net income for the year was $945,000. | |
6. | On December 31, the board of directors authorized a $451,000 restriction on retained earnings for a plant expansion. |
Reproduce the Preferred Shares, Common Shares, Stock Dividends Distributable, and Retained Earnings general ledger accounts for the year.
Prepare the shareholders’ equity section of the statement of financial position at December 31.
Preferred Shares | |||
Beg Bal | $ 525,000 | ||
$ 555,000 | Jan-01 | ||
$ 1,080,000 | End Bal | ||
Common Shares | |||
Beg bal | $ 2,688,000 | ||
$ 560,000 | Oct-01 | ||
$ 3,248,000 | End Bal | ||
Stock Dividend Distributable | |||
$ 400,400 | Dec-31 | ||
$ 400,400 | End Bal | ||
Retained Earnings | |||
Beg Bal | $ 3,222,000 | ||
Dec-31 | $ 108,000 | $ 945,000 | Net Income |
Dec-31 | $ 400,400 | ||
$ 3,658,600 | End Bal |
Stockholders Equity | |
Paid in Capital | |
Preference Shares | $ 1,080,000 |
Common Shares | $ 3,248,000 |
Stock Dividend Distributable | $ 400,400 |
Total Paid in Capital | $ 4,728,400 |
Retained Earnings | $ 3,207,600 |
Retained Earnings, Restricted | $ 451,000 |
Total Stockholders Equity | $ 8,387,000 |
Retained Earnings can be shown combined as well.