Question

On January 1, 2011, Classic Clothing Corporation’s shareholders’ equity account balances were as follows:
Preferred stock (5%, $80 par noncumulative, 35,000 shares authorized) ..... $ 800,000
Common stock ($1 par value, 750,000 shares authorized) ......... 500,000
Additional paid-in capital, preferred stock ............... 30,000
Additional paid-in capital, common stock ................ 2,000,000
Retained earnings .......................... 1,650,000
Treasury stock—common (10,000 shares, at cost) ............ 60,000
During 2011, Classic Clothing Corporation engaged in the following transactions:
January 1 Issued 10,000 shares of common stock for $6 per share
April 1 Purchased 10,000 additional shares of common treasury stock at $8 per share
June 1 Declared the annual cash dividend on preferred stock, payable June 30
December 1 Declared a $0.55 per share cash dividend to common stockholders payable December 31, 2011 Net income for the year was $940,000.

Requirements
1. Show each of the transactions in the accounting equation.
2. Prepare the shareholders’ equity section of the balance sheet at December 31, 2011.
3. Calculate return on common stockholders’ equity for the year ended December 31, 2011.



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  • CreatedSeptember 01, 2014
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