Refer to the information provided in P102B. Required: Taking into consideration the beginning balances on January 1,

Question:

Refer to the information provided in P10–2B.


Required:

Taking into consideration the beginning balances on January 1, 2021 and all the transactions during 2021, respond to the following for Nautical:

1. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2021.

2. Prepare the statement of stockholders’ equity for the year ended December 31, 2021.

3. Explain how requirements 1 and 2 are similar and how they are different.


P10-2B

Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2021, 125 shares of preferred stock and 3,000 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

March 1 Issue 3,000 additional shares of common stock for $10 per share.

April 1 Issue 175 additional shares of preferred stock for $40 per share.

June 1 Declare a cash dividend on both common and preferred stock of $0.25 per share to all stockholders of record on June 15.

June 30 Pay the cash dividends declared on June 1.

August 1 Purchase 175 shares of common treasury stock for $7 per share.

October 1 Resell 125 shares of treasury stock purchased on August 1 for $9 per share.


Nautical has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Preferred Stock, $1,250; Common Stock, $3,000; Additional Paid-in Capital, $19,500; and Retained Earnings, $11,500. Net income for the year ended December 31, 2021, is $7,650.

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...
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,...
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Financial Accounting

ISBN: 978-1259914898

5th edition

Authors: David Spiceland, Wayne M. Thomas, Don Herrmann

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