On March 1, 2014, Kissell Corporation began operations with a charter from the state that authorized 100,000

Question:

On March 1, 2014, Kissell Corporation began operations with a charter from the state that authorized 100,000 shares of $4 par value common stock. Over the next quarter, the company engaged in the transactions that follow.

Mar. 1 Issued 30,000 shares of common stock, $200,000.

2 Paid fees associated with obtaining the charter and starting up and organizing the corporation, $24,000.

Apr. 10 Issued 13,000 shares of common stock, $130,000.

15 Purchased 5,000 shares of common stock, $50,000

May 31 The board of directors declared a $0.20 per share cash dividend to be paid on June 15 to shareholders of record on June 10.

Required

1. Record the above transactions using T accounts.

2. Prepare the stockholders’ equity section of Kissell’s balance sheet on May 31, 2014.

Net income earned during the first quarter was $30,000.

3. What effect, if any, will the cash dividend declaration on May 31 have on Kissell’s net income, retained earnings, and cash flows?

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
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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...