The following information pertains to the equity accounts of Bottling Company: a. Contributed capital on January 1,

Question:

The following information pertains to the equity accounts of Bottling Company:

a. Contributed capital on January 1, 2010, consisted of 80,000 issued and outstanding shares of common stock with par value of $1; additional paid-in capital in excess of par of $480,000; and retained earnings of $560,000.

b. During the first quarter of 2010, Bottling Company issued an additional 5,000 shares of common stock for $7 per share.

c. On July 15, the company declared a 3-for-1 stock split.

d. On October 15, the company declared and distributed a 5% stock dividend. The market price of the stock on that date was $8 per share.

e. On November 1, the company declared a dividend of $0.90 per share to be paid on November 15.

f. Near the end of the year, the company’s CEO decided the company should buy 1,000 shares of its own stock. At that time, the stock was trading for $9 per share in the stock market.

g. Net income for 2010 was $75,500.

Requirements

1. Show how each of the transactions would affect the accounting equation.

2. Prepare the shareholders’ equity section of the balance sheet at December 31, 2010.

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... 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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...