Brice Co. completed the following transactions in 2016, the first year of operation: 1. Issued 40,000 shares

Question:

Brice Co. completed the following transactions in 2016, the first year of operation:

1. Issued 40,000 shares of no-par common stock for $10 per share.

2. Issued 8,000 shares of $20 par, 6 percent, preferred stock for $20 per share.

3. Paid a cash dividend of $9,600 to preferred shareholders.

4. Issued a 10 percent stock dividend on no-par common stock. The market value at the dividend declaration date was $12 per share.

5. Later that year, issued a 2-for-1 split on the shares of outstanding common stock. The market price of the stock at that time was $50 per share.

6. Produced $140,000 of cash revenues and incurred $72,000 of cash operating expenses.

7. Closed the revenue, expense, and dividend accounts to retained earnings.

Required

a. Record each of these events in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by the event.

Brice Co. completed the following transactions in 2016, the first

b. Record the 2016 transactions in general journal form and post them to T-accounts.
c. Prepare the stockholders€™ equity section of the balance sheet at the end of 2016.
d. Theoretically, what is the market value of the common stock after the stock split?

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...