Joy Sun organized Ray Beam, Inc , in January 2012 The corporation immediately issued at $15 per share one half of its 260,000 authorized shares of $1 par value common stock On January 2, 2013, the corporation sold at par value the entire 10,000 authorized shares of 10 percent, $100 par value cumula...

a RAY BEAM INC Partial Balance Sheet December 31 2015 Stockholders equity 10 cumulative preferred st ...

Joy Sun organized Ray Beam, Inc., in January 2012. The corporation immediately issued at $15 per share

Question:

Joy Sun organized Ray Beam, Inc., in January 2012. The immediately issued at $15 per share one-half of its 260,000 authorized shares of $1 common stock. On January 2, 2013, the sold at the entire 10,000 authorized shares of 10 percent, $100 cumulative preferred stock. On January 2, 2014, the company again needed capital and issued 5,000 shares of an authorized 8,000 shares of no-par cumulative preferred stock for a total of $320,000. The no-par shares have a stated of $6 per share.
The company declared no dividends in 2012 and 2013. At the end of 2013, its retained earnings were $530,000. During 2014 and 2015 combined, the company earned a total of $1,400,000.
Dividends of 90 cents per share in 2014 and $2 per share in 2015 were paid on the common stock.
Instructions
a. Prepare the stockholders' equity section of the at December 31, 2015. Include a supporting schedule showing your computation of retained earnings at the date.
b. Assume that on January 2, 2013, the could have borrowed $1,000,000 at 10 percent interest on a long-term basis instead of issuing the 10,000 shares of the $100 cumulative preferred stock. Identify two reasons a may choose to issue cumulative preferred stock rather than finance operations with long-term debt.
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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
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