Prepare a statement of stockholders' equity forOakwood for the year ended December 31, 2016 based on the followinginformation:
Oakwood Inc. is a public enterprise whose shares are traded inthe over-the-counter market. At December 31, 2015, Oakwood had6,000,000 authorized shares of $10 par value common stock, of which2,000,000 shares were issued and outstanding. The shareholders'equity accounts at December 31, 2015, had the following balances:Common stock $20,000,000 Additional paid-in capital on common stock7,500,000 Retained earnings 6,470,000 Transactions during 2016 andother information relating to the shareholders' equity accountswere as follows: On January 5, 2016, Oakwood issued at $54 pershare, 100,000 shares of $50 par value, 9%, cumulative convertiblepreferred stock. Each share of preferred stock is convertible, atthe option of the holder, into 2 shares of common stock. Oakwoodhad 600,000 authorized shares of preferred stock. On February 2,2016, Oakwood reacquired 20,000 shares of its common stock for $16per share. Oakwood uses the cost method to account for treasurystock. On April 27, 2016, Oakwood sold 500,000 shares (previouslyunissued) of $10 par value common stock to the public at $17 pershare. On June 18, 2016, Oakwood declared a cash dividend of $1 pershare of common stock, payable on July 13, 2016, to shareholders ofrecord on July 2, 2016. On November 9, 2016, Oakwood sold 10,000shares of treasury stock for $21 per share. On December 14, 2016,Oakwood declared the yearly cash dividend on preferred stock,payable on January 14, 2017, to shareholders of record on December31, 2016. On January 18, 2017, before the books were closed for2016, Oakwood became aware that the ending inventories at December31, 2015, were understated by $300,000 (the after-tax effect on2015 net income was $210,000). The appropriate correcting entry wasrecorded the same day. After correcting the beginning inventory,net income for 2016 was $4,500,000. Required: 1. Prepare astatement of stockholders' equity for Oakwood for the year endedDecember 31, 2016. Assume that only single-period financialstatements for 2016 are presented.
