Early in 2014, Jones Industries was formed with authorization to issue 125,000 shares of $20 par...

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Early in 2014, Jones Industries was formed with authorization toissue 125,000 shares of $20 par value common stock and 15,000shares of $100 par value cumulative preferred stock. During 2014,all the preferred stock was issued at par, and 90,000 shares ofcommon stock were sold for $35 per share. The preferred stock isentitled to a dividend equal to 5 percent of its par value beforeany dividends are paid on the common stock. During its first fiveyears of business (2014 through 2018), the company earned incometotaling $3,850,000 and paid dividends of 55 cents per share eachyear on the common stock outstanding. On January 2, 2016, thecompany purchased 2,000 shares of its own common stock in the openmarket for $80,000. On January 2, 2018, it reissued 1,200 shares ofthis treasury stock for $60,000. The remaining 800 shares werestill held in treasury at December 31, 2018. Required:
1. Prepare the stockholders’ equity section of the balance sheetat December 31, 2018. Include a supporting schedule showing (1)your computation of any paid-in capital on treasury stock and (2)retained earnings at the balance sheet date. (Hint: Dividends arenot paid on shares of stock held in treasury).
2. As of December 31, 2018, compute the company’s book value pershare of common stock.
3. At December 31, 2018, shares of the company’s common stockwere trading at $48. Explain what would have happened to the marketprice per share had the company split its stock 2-for-1 at thisdate. Also explain would have happened to the par value of thecommon stock and to the number of common shares outstanding.
1. Distinguish between paid-in capital and retained earnings ofa corporation. Why is such a distinction useful? What are the majortransactions and other financial activities that impact the amountof paid-in capital of a corporation? Identify for each major typeof transaction or activity whether it increases or decreases theamount of paid-in-capital.
2. Describe the usual nature of the following features as theapply to a share of preferred stock: a. Cumulative b.Convertible
3. What is the purpose of a stock split?
4. What is treasury stock? Why do corporations purchase theirown shares? Is treasury stock an asset? How should it be reportedin the balance sheet?

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1 Prepare the stockholders equity section of the balance sheet at December 31 2018 Include a supporting schedule showing 1 your computation of any paidin capital on treasury stock and 2 retained earnings at the balance sheet date Year Share Capital Reatained Earnings Preferred stock Common stock Tresury Stock Number of shares Amount Dividend Paid Number of shares Face Value Paid in capital in excess of par Dividend Paid See Answer

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Early in 2014, Jones Industries was formed with authorization toissue 125,000 shares of $20 par value common stock and 15,000shares of $100 par value cumulative preferred stock. During 2014,all the preferred stock was issued at par, and 90,000 shares ofcommon stock were sold for $35 per share. The preferred stock isentitled to a dividend equal to 5 percent of its par value beforeany dividends are paid on the common stock. During its first fiveyears of business (2014 through 2018), the company earned incometotaling $3,850,000 and paid dividends of 55 cents per share eachyear on the common stock outstanding. On January 2, 2016, thecompany purchased 2,000 shares of its own common stock in the openmarket for $80,000. On January 2, 2018, it reissued 1,200 shares ofthis treasury stock for $60,000. The remaining 800 shares werestill held in treasury at December 31, 2018. Required:1. Prepare the stockholders’ equity section of the balance sheetat December 31, 2018. Include a supporting schedule showing (1)your computation of any paid-in capital on treasury stock and (2)retained earnings at the balance sheet date. (Hint: Dividends arenot paid on shares of stock held in treasury).2. As of December 31, 2018, compute the company’s book value pershare of common stock.3. At December 31, 2018, shares of the company’s common stockwere trading at $48. Explain what would have happened to the marketprice per share had the company split its stock 2-for-1 at thisdate. Also explain would have happened to the par value of thecommon stock and to the number of common shares outstanding.1. Distinguish between paid-in capital and retained earnings ofa corporation. Why is such a distinction useful? What are the majortransactions and other financial activities that impact the amountof paid-in capital of a corporation? Identify for each major typeof transaction or activity whether it increases or decreases theamount of paid-in-capital.2. Describe the usual nature of the following features as theapply to a share of preferred stock: a. Cumulative b.Convertible3. What is the purpose of a stock split?4. What is treasury stock? Why do corporations purchase theirown shares? Is treasury stock an asset? How should it be reportedin the balance sheet?