Davis Corp. completed the following transactions in 2010, the first year of operation. 1. Issued 30,000 shares

Question:

Davis Corp. completed the following transactions in 2010, the first year of operation.

1. Issued 30,000 shares of $20 par common stock for $30 per share.

2. Issued 5,000 shares of $50 par, 4 percent, preferred stock at $51 per share.

3. Paid the annual cash dividend to preferred shareholders.

4. Issued a 5 percent stock dividend on the common stock. The market value at the dividend declaration date was $40 per share.

5. Later that year, issued a 2-for-1 split on the 31,500 shares of outstanding common stock.

6. Earned $195,000 of cash service revenues and paid $120,000 of cash operating expenses.

Required

a. Record each of these events in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by the event.

Davis Corp. completed the following transactions in 2010, the fi

b. Prepare the stockholders' equity section of the balance sheet at the end of2010.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...