Question

In: Accounting

When doing your calculations, round to the nearest whole dollar amount AND the nearest whole number...

When doing your calculations, round to the nearest whole dollar amount AND the nearest whole number of shares, Enter your answers in whole dollar amounts, without '$' signs and without commas.

This fact pattern spans three years. All eight requirements are based on this fact pattern. However, #1 only asks the balance in the Common Stock account at the end of Year 2. 

●Issuance of Shares: Company issued 6,000 common shares with a $10 per share par value for $95,000 cash early in Year 1. At the same time the firm issued 500 shares of its $50 par value 8% preferred stock for $35,000 cash. The preferred shares are participating and cumulative. In Year 1, Company had Net Income of $70,000.

●On January 1, Year 2, the firm issued a 30% common stock dividend when the shares had a fair market value of $25 per share. No cash dividends were paid in Year 2. During Year 2, the firm had Net Income of $75,000.

When doing your calculations, round to the nearest whole dollar amount. When entering your answers, round to the nearest whole dollar amount, do not use '$' signs OR commas.

#1: Common Stock balance at the end of Year 2: ______________

The other requirements are shown here for your convenience in responding to all the requirements in this quiz.

#2: Retained Earnings balance at the end of Year 2: _____________

●Early in Year 3, Company distributed a 10% common stock dividend when the fair market value of the common shares was $28 each. Net Income in Year 3 was $80,000. The firm declared and distributed a cash dividend in Dec. Year 3 in the amount of $29,000.

#3: Retained Earnings balance at Dec. 31, Year 3 _____________

#4: Cash paid to common shareholders in Year 3: _____________

#5: Balance in Common Stock account at Dec. 31, Yr 3: _____________

●On Jan. 1, Year 4, Company declared and distributed a 5% stock dividend when the fair market value of each common share was $40. Cash dividends declared and distributed late in Year 4 amounted to $38,000. Net Income for Year 4 was $85,000.

#6: Retained Earnings balance at Dec. 31, Year 4 $_____________

#7: Cash paid to preferred shareholders in Year 4: $_____________

#8: Balance in Common Stock account at Dec. 31, Yr. 4: $_____________

Expert Solution

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ekkarill92 answered 2 years ago

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