The stockholders equity accounts of Warden Corporation on January 1, 2014, were as follows. Preferred Stock (9%,


The stockholders’ equity accounts of Warden Corporation on January 1, 2014, were as follows.

Preferred Stock (9%, $50 par cumulative, 10,000 shares authorized)......$ 200,000

Common Stock ($1 stated value, 2,000,000 shares authorized).......1,000,000

Paid-in Capital in Excess of Par Value—Preferred Stock...........16, 000

Paid-in Capital in Excess of Stated Value—Common Stock........1,400,000

Retained Earnings..........................1,716,000

Treasury Stock (8,000 common shares)..................20, 000

During 2014 the corporation had these transactions and events pertaining to its stock-holders’ equity.

Feb 1 Issued 20,000 shares of common stock for $160,000.

Nov 10 Purchased 4,000 shares of common stock for the treasury at a cost of $16,000.

Nov 15 Declared a 9% cash dividend on preferred stock, payable December 15.

Dec 1 Declared a $0.30 per share cash dividend to common stockholders of record on December 15, payable December 31, 2014.

Dec 15 Paid the dividend declared on November 15.

31 Determined that net income for the year was $408,000. The market price of the common stock on this date was $5 per share. Paid the dividend declared on December 1.


(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)

(b) Enter the beginning balances in the accounts, and post the journal entries to the Stockholders’ equity accounts. (Use T-accounts.)

(c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2014.

(d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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...
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...
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...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Tools for Business Decision Making

ISBN: 978-1118128169

5th edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

Question Posted: