Burk Corp. completed the following transactions in Year 1, the first year of operation: 1. Issued 30,000

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Burk Corp. completed the following transactions in Year 1, the first year of operation:
1. Issued 30,000 shares of $10 par common stock for $15 per share.
2. Issued 6,000 shares of $100 par, 5 percent, preferred stock at $101 per share.
3. Paid the annual cash dividend to preferred shareholders.
4. Issued a 5 percent stock dividend on the common stock. The market value at the dividend declaration date was $19 per share.
5. Later that year, issued a 2-for-1 split on the 31,500 shares of outstanding common stock.
6. Earned $165,000 of cash revenues and paid $98,000 of cash operating expenses.
7. Closed the revenue, expense, and dividend accounts to retained earnings.


Required
a. Record each of these events in a horizontal statements model like the following one. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by the event.

Balance Sheet Income Statement Stk. Equlty Assets Statement of Cash Flows Pfd. Stk. PIC In + Excess PS Com. Stk. PIC In


b. Prepare the stockholders’ equity section of the balance sheet at the end of Year 1.

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...
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...
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Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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