P & C Company are authorized to issue 330,000, 12% preferred stocks (par value $10 each) and 1,000,000 common stocks (par value $5 each). 

Company issued 25,000 preferred stocks at par on Jan 17, 2020. 

Company issued 350,000 common stocks at par on Apr 11, 2020. 

Company issued 125,000 preferred stocks at $12 each on Aug 22, 2020. 

Company issued 80,000 preferred stocks at par on Sep 01, 2020. 

Company issued 300,000 common stocks at $20 each on Oct 01, 2020. 

 At the end of Dec. 31, 2020, company earned Gross Profit of $6,300,000 which is 25% of total revenue. 

Operating Expense includes salaries and admin expense of $50,000, Advertising Expense of $100,000 and other miscellaneous operating expenses of the year are 5% of total revenue. 

Interest was paid @ 8% of Notes Payable $750,000 and Mortgage Payable $800,000 and 6% on long term loan of 2,500,000. 

Company reacquired its 150,000 shares at par. 

 Interim Dividend declared: $0.25 per share on common stocks and 50% of the preferred stocks were paid. 

 Final Dividend declared: $2 per share on common stocks Ø Retained Earnings balance (Dec. 31, 2019) was $850,000. 

 

Required: 

Prepare a Retained Earnings Statement for the year ended Dec. 31, 2020 

Prepare a Shareholders' Equity Statement for the year ended Dec. 31, 2020 

Answer rating: 100% (QA)

To prepare the Retained Earnings Statement and Shareholders Equity Statement for P C Company for the year ended December 31 2020 we need to consider t... View the full answer