Banner Publications was organized early in 2015 with authorization to issue 10,000 shares of $100 par value preferred stock and 1 million shares of $1 par value common stock All of the preferred stock was issued at par, and 400,000 shares of common stock were sold for $15 per share The preferred stock pays a 10 percent cumulative dividend During the first five years of operations (2013 through 2017) the corporation earned a total of $4,100,000 and paid dividends of $0 80 per share each year on the common stock In 2018, however, the corporation reported a net loss of $1,250,000 and paid no dividends Instructions a Prepare the stockholders ' equity section of the balance sheet at December 31, 2018 Include a supporting schedule showing your computation of retained earnings at the balance sheet date b Draft a note to accompany the financial statements disclosing any dividends in arrears at the end of 2018 c Do the dividends in arrears appear as a liability of the corporation as of the end of 2018 Explain

Question: Banner Publications was organized early in 2015 with authorization to issue 10,000 shares of $100 par value preferred stock and 1 million shares of $1

Banner Publications was organized early in 2015 with authorization to issue 10,000 shares of $100 preferred stock and 1 million shares of $1 common stock. All of the preferred stock was issued at par, and 400,000 shares of were sold for $15 per share. The preferred stock pays a 10 percent cumulative dividend.
During the first five years of operations (2013 through 2017) the earned a total of $4,100,000 and paid dividends of $0.80 per share each year on the common stock. In 2018, however, the reported a net loss of $1,250,000 and paid no dividends.
Instructions
a. Prepare the stockholders' equity section of the at December 31, 2018. Include a supporting schedule showing your computation of retained earnings at the date.
b. Draft a note to accompany the disclosing any dividends in arrears at the end of 2018.
c. Do the dividends in arrears appear as a liability of the as of the end of 2018? Explain.

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