80.2K

Verified Solution

Link Copied!

Sarah Co. has the following stockholders' equity for 12/31/2019: $ 25,000 1,400 26,400 - 208,600 235,000 280,000 (7,500) $ 507,500 Required: Record the transactions listed and prepare the 2020 stockholders' equity section of the balance sheet. The company reported NI of $90,000 for 2020. Preferred stock, 8%, $50 par, 8,000 shares authorized, 500 shares issued and outstanding Required: (1) For each of the three independent cases 7,000 shares issued, and 6,700 shares outstanding Total capital stock Additional paid-in capital: Preferred Common Total paid-in capital Retained earnings Treasury Stock (300 shares at $25 cost) Total stockholders equity (a) Record the transactions listed. (1) Sold 100 shares of its treasury stock at $35 per share. The company uses the cost method. (2) Issued 300 shares of preferred stock for a patent. The stock was trading for $51 at the time of the exchange. (3) Declared and issued a 2:1 stock split on common stock when the common stock is selling at $40 per share. Page 1

Calculations: Required calculations: i. Common stock ii. Additional PIC - Common iii. Treasury stock (4) Declared and immediately paid annual dividends of $10 and $2 per share for preferred and common, respectively. Show separately the calculations for total dividends paid to common and preferred following the journal entry. (b) Prepare 12/31/2020 stockholders' equity section of the balance sheet. In your solution,

Answer & Explanation Solved by verified expert

See Answer