Question

The stockholders’ equity accounts of Warden Corporation on January 1, 2014, were as follows.
Preferred Stock (9%, $50 par cumulative, 10,000 shares authorized)......$ 200,000
Common Stock ($1 stated value, 2,000,000 shares authorized).......1,000,000
Paid-in Capital in Excess of Par Value—Preferred Stock...........16, 000
Paid-in Capital in Excess of Stated Value—Common Stock........1,400,000
Retained Earnings..........................1,716,000
Treasury Stock (8,000 common shares)..................20, 000
During 2014 the corporation had these transactions and events pertaining to its stock-holders’ equity.
Feb 1 Issued 20,000 shares of common stock for $160,000.
Nov 10 Purchased 4,000 shares of common stock for the treasury at a cost of
$16,000.
Nov 15 Declared a 9% cash dividend on preferred stock, payable December 15.
Dec 1 Declared a $0.30 per share cash dividend to common stockholders of
record on December 15, payable December 31, 2014.
Dec 15 Paid the dividend declared on November 15.
31 Determined that net income for the year was $408,000. The market price of the common stock on this date was $5 per share. Paid the dividend declared on December 1.
Instructions
(a) Journalize the transactions. (Include entries to close net income and dividends to
Retained Earnings.)
(b) Enter the beginning balances in the accounts, and post the journal entries to the
Stockholders’ equity accounts. (Use T-accounts.)
(c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2014.
(d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity.



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  • CreatedApril 07, 2014
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