On January 1, 2013, Knox Company showed the following alphabetical list of shareholders' equity items: Additional paid-in

Question:

On January 1, 2013, Knox Company showed the following alphabetical list of shareholders' equity items:

Additional paid-in capital on common stock ...........$130,000

Additional paid-in capital on preferred stock ...............6,000

Common stock, $10 par ....................................100,000

Preferred stock, $100 par ....................................50,000

Retained earnings ............................................224,000

During 2013, the following events occurred and were properly recorded by the company:

1. Knox purchased an investment in available-for-sale securities. At year-end, the fair value of the securities had increased by $9,000.

2. Knox issued 2,000 shares of common stock for $25 per share.

3. Knox issued 110 shares of preferred stock for $116 per share.

4. Knox reacquired 400 shares of its common stock as treasury stock at a cost of $26 per share.

5. Knox earned net income of $57,000.

6. Knox paid a $7 per share dividend on the preferred stock and a $1.25 per share dividend on the common stock outstanding at the end of 2013 (treasury stock is not entitled to dividends).

Required:

Prepare a statement of shareholders' equity for 2013, including retained earnings.

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...
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...
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Related Book For  book-img-for-question

Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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