On January 1, 2010, Garcia Inc. had the following shareholders equity balances. Common Stock , no-par value

Question:

On January 1, 2010, Garcia Inc. had the following shareholders’ equity balances.

Common Stock, no-par value (1,000,000 shares issued) .. $3,000,000

Common Stock Dividends Distributable .......... 400,000

Retained Earnings ................. 1,200,000

During 2010, the following transactions and events occurred.

1. Issued 100,000 shares of common stock as a result of a 10% stock dividend declared on December 15, 2009.

2. Issued 60,000 shares of common stock for cash at $5 per share.

3. Corrected an error that had understated the net income for 2008 by $140,000.

4. Declared and paid a cash dividend of $300,000.

5. Earned net income of $600,000.

Instructions

Prepare the stockholders’ equity section of the balance sheet at December 31, 2010.

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...