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Retained Earnings and Stockholders Equity

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The ledger Of Omega Corporation at Dec. 31, 2007, after the books have been closed, contains the following stockholders equity accounts.

Preferred stock (10,000 shares issued) $1,000,000
Common stock (450,000 shares issued) $2,250,000
Paid in capital in excess of par value Pref. stock $ 200,000
Paid in capital in excess of stated value Com stock $1,600,000
Retained Earnings $ 3,060,000

A review of the accounting records reveals this information:
1) Preferred stock is 7%, 100 value non-cumulative. Since January 1, 2006, 10,000
Shares have been outstanding; 20,000 shares are authorized.
2) Common stock is no-par with a stated value of $5 per share; 600,000 shares are authorized.
3) The Jan. 1, 2007 balance in retained earnings was $2,580,000.
4) On Oct. 1, 60,000 shares of common stock were sold for cash at $8 per share
5) Net income for the year was $880,000.
6) On Dec.31, 2007, the directors authorized disclosure of a $130,000 restriction of retained earnings for plant expansion (Use Note A)

A) reproduce the retained earnings account (T account) for the year.
B) Prepare the stockholders equity section of the balance sheet at Dec.31, 2007

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P11-4A

The ledger Of Omega Corporation at Dec. 31, 2007, after the books have been closed, contains the following stockholders equity accounts.

Preferred stock (10,000 shares issued) $1,000,000
Common stock (450,000 shares issued) $2,250,000
Paid in capital in excess of par value Pref. stock $ 200,000
Paid in capital in excess of stated value Com stock $1,600,000
Retained Earnings $ 3,060,000

A review of the accounting records reveals this information:
1) Preferred stock is 7%, 100 value non-cumulative. Since ...

Solution Summary

The solution explains how to prepare the retained earnings T-account and the stockholders equity section of the balance sheet after making the required adjustments.

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ACCOUNTING II

13-2A Contex Corporation reports the following components of stockholders' equity on December 31, 2011.

Common stock - $10 par value, 50,000 shares authorized,
20,000 shares issued and outstanding..................................$200,000
Paid-in capital in excess of par value, common stock................ 30,000
Retained earnings......................................................................135,000
Total stockholders' equity...........................................................$365,00

In year 2012, the following transactions affected its stockholders' equity accounts.

Jan. 1 - Purchased 2,000 shares of its own stock at $20 each per share.
Jan. 5 - Directors declared a $2 per share cash dividend payable on Feb. 28 to Feb. 5 stockholders of record.
Feb. 28 - Paid the dividend declared on January 5.
July 6 - Sold 750 of its treasury shares at $24 cash per share
Aug. 22 - Sold 1,250 of its treasury shares at $17 cash per share.
Sept 5 - Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Oct. 28 - Paid the dividend declared on September 5.
Dec 31 - Closed the $194,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Required:
1. Prepare journal entries to record each of these transactions for 2012.
2. Prepare a statement of retained earnings for the year ended December 31, 2012.
3. Prepare the stockholders' equity section of the company's balance sheet as of December 31, 2012.

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