The Adams family decided early in 2010 to incorporate their family-owned farm under the name Adams Corporation.
Question:
2010. In January the corporation issued to members of the Adams family 20,000 shares of capital stock in exchange for cash and other assets used in the operation of the farm. The fair market value of these assets indicated an issue price of $25 per share. In December, George Adams died and the corporation purchased 4,000 shares of its own capital stock from his estate at $30 per share. Because of the large cash outlay to acquire this treasury stock, the directors decided not to declare cash dividends in 2010 and instead declared a 10 percent stock dividend to be distributed in January 2011. The stock price at the declaration date was $31 per share. (The treasury shares do not participate in the stock dividend.) Net income for 2010 was $850,000.
2011. In January the corporation distributed the stock dividend declared in 2010, and in February, the 4,000 treasury shares were sold to Joan Adams at $35 per share. In June, the capital stock was split 2-for-1. (Approval was obtained to increase the authorized number of shares to 200,000.) On December 11, the directors declared a cash dividend of $1 per share, payable in January 2012. Net income for 2011 was $810,000.
Instructions
Using the format illustrated in Exhibit 126, prepare the stockholders equity section of the balance sheet at:
a. December 31, 2010.
b. December 31, 2011.
Show any necessary computations in supportingschedules. Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Financial And Managerial Accounting
ISBN: 12
14th International Edition
Authors: Jan R. Williams, Joseph V. Carcello, Mark S. Bettner, Sue Haka, Susan F. Haka
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