The ledger of Wade Corporation at December 31, 2014, after the books have been closed, contains the following stockholders’ equity accounts.
Preferred Stock (10,000 shares issued).............$1,000,000
Common Stock (300,000 shares issued).............1,500,000
Paid-in Capital in Excess of Par Value—Preferred Stock.......200,000
Paid-in Capital in Excess of Stated Value—Common Stock......1, 600,000
Retained Earnings......................2,860,000
A review of the accounting records reveals this information:
1. Preferred stock is 8%, $100 par value, noncumulative. Since January 1, 2013, 10,000 shares have been outstanding; 20,000 shares are authorized.
2. Common stock is no-par with a stated value of $5 per share; 600,000 shares are authorized.
3. The January 1, 2014, balance in Retained Earnings was $2,380,000.
4. On October 1, 60,000 shares of common stock were sold for cash at $9 per share.
5. A cash dividend of $400,000 was declared and properly allocated to preferred and common stock on November 1. No dividends were paid to preferred stockholders in 2013.
6. Net income for the year was $880,000.
7. On December 31, 2014, the directors authorized disclosure of a $160,000 restriction of retained earnings for plant expansion. (Use Note A.)
(a) Reproduce the Retained Earnings account (T-account) for the year.
(b) Prepare the stockholders’ equity section of the balance sheet at December 31.

  • CreatedApril 07, 2014
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