Big Billy was a free-lance engineer who developed and patented a highly efficient turbocharger for automotive racing engines. In early 2019, Big Billy organized Performance, Inc., to manufacture his turbocharger. The corporation was authorized to issue 150 ,000 shares of $10 par value common stock. Presented below is information concerning the stockholder's equity activity of Performance, Inc. for 2019 and 2020 . 2019: In January, the corporation issued 80,000 shares of common stock to investors for cash at $32 per share. In addition, 5,000 shares of common stock were issued to Big Billy in exchange for his patents on the turbocharger. In November, Big Billy was unfortunately killed while auto racing in Europe. At the request of his heirs, Performance, Inc., repurchased the 5,000 shares of common stock from Big Billy's estate at $54 per share. Because of the unexpected cash outlay to acquire this stock, the board of directors decided against declaring any cash dividends in 2019. Instead, they declared and distributed a 5% stock dividend on the common shares outstanding at the year-end. The annual report for the first year of operations of the company revealed net income of $415,000 and the stock market at the end of the first year of operations valued Performance, Inc., common at $52 per share. 2020: In March, 3,000 shares of the common stock acquired from the Big Billy estate were resold to investors for cash at $53 per share. In August, the common stock was split: five shares for four shares. In October, an additional 1,000 shares from the Big Billy estate were sold for $55 per share. In December, the directors declared a common stock dividend of $.70 per share to be paid in January. The annual report for the second year of operations revealed net income of $486,000 and the stock market at the end of the second year valued Performance, Inc., at $64 per share. REQUIRED 1. Prepare an appropriately classified stockholder's equity section of a balance sheet for Performance, Inc., as of December 31, 2019. (Hint: You may want to create ledger "T accounts" and post the transactions to these accounts as an aid in answering this requirement.) 2. Prepare an appropriately classified stockholder's equity section of a balance sheet for Performance, Inc., as of December 31, 2020. (Hint: You may want to create ledger "T accounts" and post the transactions to these accounts as an aid in answering this requirement.) Big Billy was a free-lance engineer who developed and patented a highly efficient turbocharger for automotive racing engines. In early 2019, Big Billy organized Performance, Inc., to manufacture his turbocharger. The corporation was authorized to issue 150 ,000 shares of $10 par value common stock. Presented below is information concerning the stockholder's equity activity of Performance, Inc. for 2019 and 2020 . 2019: In January, the corporation issued 80,000 shares of common stock to investors for cash at $32 per share. In addition, 5,000 shares of common stock were issued to Big Billy in exchange for his patents on the turbocharger. In November, Big Billy was unfortunately killed while auto racing in Europe. At the request of his heirs, Performance, Inc., repurchased the 5,000 shares of common stock from Big Billy's estate at $54 per share. Because of the unexpected cash outlay to acquire this stock, the board of directors decided against declaring any cash dividends in 2019. Instead, they declared and distributed a 5% stock dividend on the common shares outstanding at the year-end. The annual report for the first year of operations of the company revealed net income of $415,000 and the stock market at the end of the first year of operations valued Performance, Inc., common at $52 per share. 2020: In March, 3,000 shares of the common stock acquired from the Big Billy estate were resold to investors for cash at $53 per share. In August, the common stock was split: five shares for four shares. In October, an additional 1,000 shares from the Big Billy estate were sold for $55 per share. In December, the directors declared a common stock dividend of $.70 per share to be paid in January. The annual report for the second year of operations revealed net income of $486,000 and the stock market at the end of the second year valued Performance, Inc., at $64 per share. REQUIRED 1. Prepare an appropriately classified stockholder's equity section of a balance sheet for Performance, Inc., as of December 31, 2019. (Hint: You may want to create ledger "T accounts" and post the transactions to these accounts as an aid in answering this requirement.) 2. Prepare an appropriately classified stockholder's equity section of a balance sheet for Performance, Inc., as of December 31, 2020. (Hint: You may want to create ledger "T accounts" and post the transactions to these accounts as an aid in answering this requirement.)
