Critical Thinking 14-05 a

The stockholders' equity accounts of Cullumber, Inc., at January 1, 2020, are as follows.

Preferred Stock, no par, 7,000 shares issued

$700,000

Common Stock, no par, 108,000 shares issued

540,000Retained Earnings

495,000

During 2020, the company had the following transactions and events.

July

1Declared a $0.50 cash dividend per share on common stock.

Aug.

1Discovered a $71,000 overstatement of 2019 depreciation expense. (Ignore income taxes.)

Sept.

1Paid the cash dividend declared on July 1.

Dec.

1Declared a 10% stock dividend on common stock when the market price of the stock was $14 per share.

15

Declared a $4 per share cash dividend on preferred stock, payable January 31, 2021.

31

Determined that net income for the year was $400,000.