Problem 14-3A The post -closing trial balance of Storey Corporation at Decembr 3
ID: 2450008 • Letter: P
Question
Problem 14-3A
The post -closing trial balance of Storey Corporation at Decembr 3,2014, contains the following stockholders' equity accounts.
A review of accounting records reveals the following.
1. No errores have been made in recording 2014 transactions or in preparing the closing entry for net income.
2. Preferred Stock is $50 par, 6%, and cumulative; 15,100 shares have been outstanding since January 1, 2013.
3. Authorize Stock is 20,100 shares of preferred , 517,800 shares of common with a $11 par value.
4. The January 1 balance in Retained Earnings ws $1,156,500.
5. On July 1, 18,900 shares of common stock were issued for cash at $17 per share.
6. On September 1, the company discovered an understatement error of $92,700 in computing depreciation in 2013. The net od atx effect of $64,890 was properly debited directly to Retained Earnings.
7. A cash dividend of $284,790 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2013.
8. On December 31, a 10% common stock dividends was declared out of retained earnings on common stock when the market price per share ws $17.
9. Net income for the year was $572,200.
10. On December 31, 2014, the directors authorized disclosure of a $209,400 restriction of retained earnings for palnt expansion. (Use Note X).
A. Reproduce the Retained Earnings account for 2014.
B. Prepare a retained earnings statement for 2014.
C. Prepare a stockholders' equity section at December 31, 2014.
D. Compute the allocation of the cash dividend to preferred and common stock.
Preferred Stock (15,100 shares issued) $755,000 Common Stock (258,900 shares issued) $2,847,900 Paid-in Capital in Excess of Par-Preferred Stock $259,100 Paid-in Capital in Excess of Par- Common Stock $412,300 Common Stock Dividends Distributable $284,790 Retained Earnings $938,890Explanation / Answer
Answer:A Reproduce the Retained Earnings account for 2014.
B. Prepare a retained earnings statement for 2014.
C. Prepare a stockholders' equity section at December 31, 2014.
Stockholders' Equity
Capital stock :
Preferred stock, cumulated 6%, $50 par value, 20,100 shares authorized,
15100 shares issued and outstanding .......... .......... .......... .......... .......... ... 755,000
Common stock, $11 stated value, 5178,00 shares authorised, 258900
shares issued and outstanding .......... .......... .......... .......... .......... .......... ..... 2847900
Paid-in capital in excess of par - preferred stock .......... ......... ......... ......... ... 259100
Paid-in capital in excess of stated value - common stock ......... ......... ...... 412300
Common stock dividend distributable .......... ....... ...... .......... ......... .......... .... 284790
Retained earnings .......... .......... .......... .......... .......... .......... .......... ............ 938890
Total stockholders' equity .......... .......... .......... .......... .......... .......... .......... ... 5497980
Note A
Of the retained earnings above, $209400 is restricted for plant expansion and not available for payment of dividends.
D. Compute the allocation of the cash dividend to preferred and common stock.
Preferred dividend = $50 x 6% x 15100 shares = $45300
Common dividend = $284,790 - $45300 = $239490