Glass Corporation began operations on September 1, 2010. The corporations charter authorized 150,000 shares of $8 par

Question:

Glass Corporation began operations on September 1, 2010. The corporation’s charter authorized 150,000 shares of $8 par value common stock. Glass Corporation engaged in the following transactions during its first quarter:

Sept. 1 Issued 25,000 shares of common stock, $250,000.

1 Paid an attorney $16,000 to help start up and organize the corporation and obtain a corporate charter from the state.

Oct. 2 Issued 40,000 shares of common stock, $480,000.

15 Purchased 5,000 shares of common stock for $75,000.

Nov. 30 Declared a cash dividend of $0.40 per share to be paid on December 15 to stockholders of record on December 10.

Required

1. Prepare entries in T accounts to record the transactions on the previous page.

2. Prepare the stockholders’ equity section of Glass Corporation’s balance sheet on November 30, 2010. Net income for the quarter was $40,000.

3. What effect, if any, will the cash dividend declaration on November 30 have on net income, retained earnings, and cash flows?

Common Stock
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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
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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,...