REQUIREMENT 1 Identify the specic effects (including account name, dollar amount, and financial statement impact) on the various balance sheet components. Use (l) to indicate an increase, (D) to indicate a decrease and NE to indicate the transaction has no effect on a particular balance sheet component. Transaction Assets Liabi'ities Contributed Retained Capital Earnings As part of Makepeace Properties incorporation agreement, a consultant was retained at an agreed-upon fee of $80,000 to provide a marketing plan for the rst year of business. The plan benefited the first year only. The consultant felt that Makepeace had an excellent opportunity for success. So the consultant waived the normal $80,000 consulting fee in exchange for 1,000 shares of Makepeace's $1 par value common stock. Honest Vegetable Co. acquired a tract of undeveloped land in exchange for 9,000 shares of $1 par value common stock. The land's market value was not easily determinable, but the common stock sold on the New York Stock Exchange for $21 per share on the date of the transaction. REQUIREMENT 2 The following is the owners' equity section of Simpson Co. at January 1, 20Y1: Common Stock ($1 par value; 20,000,000 shares authorized; 4,000,000 shares issued and outstanding) $ 4,000,000 7% Preferred stock ($30 par value; 1,000,000 shares authorized; 400,000 shares issued and outstanding) 12,000,000 Additional paid-in capital on common stock 17,000,000 Retained earnings 35,000,000 Total Stockholders' Equity $ 68,000,000 Simpson declares dividends on common and preferred stock annually. On December 23, 2OY1, Simpson declares the annual dividend of $1,500,000 to shareholders of record on December 31, 20Y1, to be paid January 5, 20Y2. Determine the total amount of the dividend that is allocated to common and preferred shareholders. Common Preferred CHAPTER 15 HANDOUT | PAGE 1