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P8-23 (modified) Sun Corporation received a charter that authorized the issuance of 100,000 shares of $10...

P8-23 (modified)

Sun Corporation received a charter that authorized the issuance of 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 5 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first year of operations. Record these transactions in the horizontal statements model provided below.

Jan 5 Sold 6,000 shares of the $10 par common stock for $15 per share.

Jan 12 Sold 1,000 shares of the 5 percent preferred stock for $55 per share.

Apr 5 Sold 30,000 shares of the $10 par common stock for $21 per share.

Dec 1 Declared the cash dividend on the outstanding shares of preferred stock for the year as well as a $0.50 per share dividend on the common stock. The dividends will be paid on December 20 to stockholders of record on December 10.

Date	Assets	Liab.	Equity					Rev	Exp	Net Inc.	Cash Flow
Date	Cash	Div. Pay.	Com. Stk.	PIC in Excess	Pref. Stk.	PIC in Excess	R. Earn	Rev	Exp	Net Inc.	Cash Flow
1/5
1/12
4/5
12/1
12/20

Solutions

Expert Solution

Requirement asked

Date

Assets

Liab.

Equity

Rev

Exp

Net Inc.

Cash Flow

Cash

Div. Pay.

Com. Stk.

PIC in Excess

Pref. Stk.

PIC in Excess

R. Earn

05-Jan

$90,000

$60,000

$30,000

$90,000

12-Jan

$55,000

$50,000

$5,000

$55,000

05-Apr

$630,000

$300,000

$330,000

$630,000

01-Dec

$20,500

($20,500)

20-Dec

($20,500)

$754,500

$360,000

$50,000

$5,000

($20,500)

$775,000

Calculation

Date

Assets

Liab.

Equity

Rev

Exp

Net Inc.

Cash Flow

Cash

Div. Pay.

Com. Stk.

PIC in Excess

Pref. Stk.

PIC in Excess

R. Earn

05-Jan

=6000 shares x $ 15

=6000 shares x $ 10 par

=6000 shares x $ 5

=6000*15

12-Jan

=1000 shares x $ 55

=1000 shares x $ 50

=1000 shares x $ 5

=1000*55

05-Apr

=30000 shares x $ 21

=30000 shares x $ 10 par

=30000 shares x $ 11

=30000*21

01-Dec

=(1000 shares x $ 50 par x 5%)+(36000 common stock shares x $0.5)

-20500

20-Dec

-20500

ekkarill92 answered 1 year ago

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