Sussex Corporation began operations on September 1, 20xx. The corporation’s charter authorized 300,000 shares of $8 par value common stock.

Sussex Corporation engaged in the following transactions during its first quarter:

Sept. 1 Issued 50,000 shares of common stock, $500,000.

1 Paid an attorney $32,000 to help start up and organize the corporation and obtain a corporate charter from the state.

Oct. 2 Issued 80,000 shares of common stock, $960,000.

15 Purchased 10,000 shares of common stock for $150,000.

Nov. 30 Declared a cash dividend of $.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 above transactions.

2. Prepare the stockholders’ equity section of Sussex Corporation’s balance sheet on November 30, 20xx. Net income for the quarter was $80,000.

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

Preferred and Common Stock Dividends and Dividend Yield