Ch 8. prob 23 Sun Corporation received a charter that authorized the issuance of
ID: 2578494 • Letter: C
Question
Ch 8. prob 23
Sun Corporation received a charter that authorized the issuance of 87,000 shares of $7 par common stock and 20,000 shares of $75 par, 7 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation:
2018
2019
Declared the annual dividend on the preferred stock and a $0.75 per share dividend on the common stock.
part A. Already done
Jan. 5 Sold 13,050 shares of the $7 par common stock for $9 per share. 12 Sold 2,000 shares of the 7 percent preferred stock for $85 per share. Apr. 5 Sold 17,400 shares of the $7 par common stock for $11 per share. Dec. 31 During the year, earned $316,400 in cash revenue and paid $243,200 for cash operating expenses. 31 Declared the cash dividend on the outstanding shares of preferred stock for 2018. The dividend will be paid on February 15 to stockholders of record on January 10, 2019. Sun Corporation Accounting Equation Event AssestLiabilities Stockholders' Equity Paid-in Paid-in Capital in Capital in Treasury Dividends Preferred Common Cash |= Payable Accounts Titles for Retained Earnings Stock+ Stock +Exce ss of + Exce ss of Stock Earnings Preferred Stock Common Stock 2018 Jan.5 Jan.12 Apr.5 Dec.31 Dec.31 (243,200) Dec.31 Bal 091,350+ 26,100 117,4501 = 170,000 1914001 316.400- 121,800+ 69,600 0316,400 Service revenue 0-r (243.200)Operating expenses 01 + (10.500)[Dividends 062,700 10,500+ 10,500+ 552,050 213,150 + 95,700- 2019 Feb. 15 Mar.3 May.5 Dec.31 Dec.31 Dec.31 Bal (10,500)|+ 0 NA (10,500)|, 285,000 (7,700)- 252.2001 0225,000+ 60,000+ 7,700+ 0252,200 Service revenue 0 (175,800) Operating expenses 0| + (48,675)[Dividends 0 (175,800) 48,675+ 48.675 225,000 895.2501 213,150+ 60,000+ 95,700- 7,700 + 90,425Explanation / Answer
B) Shareholder's equity :
Balance sheet :
Stockholder's equity Preferred stock 225000 Paid in capital in excess of par value- Preferred stock 60000 Common stock 213150 Paid in capital in excess of par value- common stock 95700 Total paid in capital 593850 Retained earnings 90425 Total 684275 Less; Treasury stock (7700) Total stockholder's equity 676575