Question

The post-closing trial balance of Dondec Corporation at December 31, 2014, contains these stockholders’ equity accounts.
Preferred Stock (6,000 shares issued).................$ 300,000
Common Stock (350,000 shares issued) ..................3,500,000
Paid-in Capital in Excess of Par Value—Preferred Stock..........250,000
Paid-in Capital in Excess of Par Value—Common Stock..........520,000
Retained Earnings..........................720,000
A review of the accounting records reveals this information:
1 Preferred stock is $50 par, 10%, and cumulative; 6,000 shares have been outstanding since January 1, 2013.
2 Authorized stock is 20,000 shares of preferred and 500,000 shares of common with a $10 par value.
3 The January 1, 2014, balance in Retained Earnings was $800,000.
4 On July 1, 20,000 shares of common stock were sold for cash at $16 per share.
5 A cash dividend of $380,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2013.
6 Net income for the year was $300,000.
7 On December 31, 2014, the directors authorized disclosure of a $150,000 restriction of retained earnings for plant expansion. (Use Note X.)
Instructions
(a) Reproduce the Retained Earnings account (T-account) for the year.
(b) Prepare the stockholders’ equity section of the balance sheet at December 31.



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  • CreatedApril 07, 2014
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