Oakwood Inc. is a public enterprise whose shares are traded in the over-the-counter market. At December 31,

Question:

Oakwood Inc. is a public enterprise whose shares are traded in the over-the-counter market. At December 31, 2018, Oakwood had 6,000,000 authorized shares of $10 par value common stock, of which 2,000,000 shares were issued and outstanding. The shareholders’ equity accounts at December 31, 2018, had the following balances:
Common stock ..................................................................$20,000,000
Additional paid-in capital on common stock ....................7,500,000
Retained earnings ..............................................................6,470,000
Transactions during 2019 and other information relating to the shareholders’ equity accounts were as follows:
1. On January 5, 2019, Oakwood issued at $54 per share, 100,000 shares of $50 par value, 9%, cumulative convertible preferred stock. Each share of preferred stock is convertible, at the option of the holder, into 2 shares of common stock. Oakwood had 600,000 authorized shares of preferred stock.
2. On February 2, 2019, Oakwood reacquired 20,000 shares of its common stock for $16 per share. Oakwood uses the cost method to account for treasury stock.
3. On April 27, 2019, Oakwood sold 500,000 shares (previously unissued) of $10 par value common stock to the public at $17 per share.
4. On June 18, 2019, Oakwood declared a cash dividend of $1 per share of common stock, payable on July 13, 2016, to shareholders of record on July 2, 2016.
5. On November 9, 2019, Oakwood sold 10,000 shares of treasury stock for $21 per share.
6. On December 14, 2019, Oakwood declared the yearly cash dividend on preferred stock, payable on January 14, 2017, to shareholders of record on December 31, 2019.
7. On January 18, 2020, before the books were closed for 2019, Oakwood became aware that the ending inventories at December 31, 2018, were understated by $300,000 (the after-tax effect on 2018 net income was $210,000). The appropriate correcting entry was recorded the same day.
8. After correcting the beginning inventory, net income for 2019 was $4,500,000.

Required:
1. Prepare a statement of retained earnings for Oakwood for the year ended December 31, 2019. Assume that only single-period financial statements for 2019 are presented.
2. Prepare the shareholders’ equity section of Oakwood’s balance sheet at December 31, 2019.

Financial Statements
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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... 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,...

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