Davis Corporation was authorized to issue 100,000 shares of $10 par common stock and 50,000 shares of

Question:

Davis Corporation was authorized to issue 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 6 percent, cumulative preferred stock. Davis Corporation completed the following transactions during its first two years of operation.

2012

Jan. 2 Issued 5,000 shares of $10 par common stock for $28 per share.

15 Issued 1,000 shares of $50 par preferred stock for $70 per share.

Feb. 14 Issued 15,000 shares of $10 par common stock for $30 per share.

Dec. 31 During the year, earned $170,000 of cash service revenue and paid $110,000 of cash operating expenses.

31 Declared the cash dividend on outstanding shares of preferred stock for 2012. The dividend will be paid on January 31 to stockholders of record on January 15, 2013.

2013

Jan. 31 Paid the cash dividend declared on December 31, 2012.

Mar. 1 Issued 2,000 shares of $50 par preferred stock for $58 per share.

June 1 Purchased 500 shares of common stock as treasury stock at $43 per share.

Dec. 31 During the year, earned $210,000 of cash service revenue and paid $175,000 of cash operating expenses.

31 Declared the dividend on the preferred stock and a $0.60 per share dividend on the common stock.

Required

a. Organize the transaction data in accounts under an accounting equation.

b. Prepare the stockholders’ equity section of the balance sheet at December 31, 2012.

c. Prepare the balance sheet at December 31, 2013.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...