Min Co. is a publicly held company whose shares are traded in the over-counter market. It issues single-period statements only. The equity accounts at December 31, Year 5 had the following balances:

Preferred Stock, $100 par value, 6% noncumulative; 5,000 shares authorized; 2,000 shares issued and outstanding 200,000

Common stock, $1 par value, 150,000 shares authorized; 100,000 shares issued and outstanding 100,000

Additional paid-in capital 800,000

Retained earnings 1, 586,000

Accumulated other comprehensive income 312,000

Total Equity 2,998,000

Transactions during Year 6 and other information relating to the equity accounts were as follows:

A.- February 1, Year 6- Issued 13,000 shares of common stock to Ram Co. in exchange for land. On the date issued, the stock had a market value of $11 per share. The land had a carrying amount on Ram’s books of $135,000 and an assessed value for property taxes purposes of $90,000

B.- March 1, Year 6- Purchased 5,000 shares of its common stock to be held as treasury stock for $14 per share. Min used the cost method to account for treasury stock.

C.- May 10, Year 6- Declared a property dividend of marketable securities to be distributed to common shareholders. The securities had a carrying amount of $600,000. Fair values on relevant dates were:

Date of declaration-May 10, Year 6 720,000

Date of record-May 25, Year 6 758,000

Date of distribution-June 1, Year 6 736,000

D.- September 17, Year 6 – Purchased 150,000 shares of Max Co. stock classified as available for sale for $12 per share.

E.- October 1, Year 6- Reissued 2,000 shares of treasury stock for $16 per share.

F) November 4, Year 6- Declared a cash dividend of $1.50 per share to common shareholders of record on November 15, Year 6. The dividend was paid on November 25, Year 6.

G.- December 20, Year 6- Declared the required annual cash dividend on preferred stock for year 6. The dividend was paid on January 5, Year 7.

H.- January 16, Year 7- After issuance of the financial statements for Year 6, Min became aware that no amortization had been recorded for Year 6 for a patent purchased on July 1, Year 6. The patent was properly capitalized at $320,000 and had an estimated useful life of 8 years when purchased. Min’s income tax rate is 30%.

I.- Adjusted net income for Year 6 was $838,000

J.- Max Co. stock traded for $14 per share on December 31, Year 6.

For the following retained earnings items, enter the amounts using the information above. These items will be reported on Min’s statement of changes in equity OR in a separate statement of retained earnings.

Retained Earnings Item:

1.- Prior-Period Adjustment

2.- Preferred dividends

3.- Common dividends -cash

4.- Common Dividends – property

For the following equity items, enter the amounts requested using the information above. These items will be reported on Min’s statement of changes in equity at December 31, Year 6

Equity Item:

1.- Number of common shares issued

2.- Dollar amount of common stock issued

3.- Additional paid-in capital

4.- Treasury Stock

Answer rating: 100% (QA)

Part A Retained Earnings Item Amount Charged to Retained Earnings 1 Priorperiod adjustment 14000 2 P... View the full answer