Ohio Company was formed on July 1, 2005. It was authorized to issue 300,000 shares of $10

Question:

Ohio Company was formed on July 1, 2005. It was authorized to issue 300,000 shares of $10 par value common stock and 100,000 shares of 8% $25 par value, cumulative and nonparticipating preferred stock. Ohio Company has a July 1–June 30 fiscal year.

The following information relates to the stockholders’ equity accounts of Ohio Company.

Common Stock Prior to the 2007–2008 fiscal year, Ohio Company had 110,000 shares of outstanding common stock issued as follows.

1. 95,000 shares were issued for cash on July 1, 2005, at $31 per share.

2. On July 24, 2005, 5,000 shares were exchanged for a plot of land which cost the seller $70,000 in 1999 and had an estimated market value of $220,000 on July 24, 2005.

3. 10,000 shares were issued on March 1, 2006, for $42 per share.

During the 2007–2008 fiscal year, the following transactions regarding common stock took place.

November 30, 2007 Ohio purchased 2,000 shares of its own stock on the open market at $39 per share. Ohio uses the cost method for treasury stock.

December 15, 2007 Ohio declared a 5% stock dividend for stockholders of record on January 15, 2008, to be issued on January 31, 2008. Ohio was having a liquidity problem and could not afford a cash dividend at the time. Ohio’s common stock was selling at $52 per share on December 15, 2007.

June 20, 2008 Ohio sold 500 shares of its own common stock that it had purchased on November 30, 2007, for $21,000.

Preferred Stock

Ohio issued 50,000 shares of preferred stock at $44 per share on July 1, 2006.

Cash Dividends

Ohio has followed a schedule of declaring cash dividends in December and June, with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2008, are shown below.

Ohio Company was formed on July 1, 2005. It was

No cash dividends were declared during June 2008 due to the company's liquidity problems.

Retained Earnings

As of June 30, 2007, Ohio’s retained earnings account had a balance of $690,000. For the fiscal year ending June 30, 2008, Ohio reported net income of $40,000.

Instructions

Prepare the stockholders’ equity section of the balance sheet, including appropriate notes, for Ohio Company as of June 30, 2008, as it should appear in its annual report to the shareholders.

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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...