Dragon Corporation

Statement of Stockholder's Equity

31-Dec-20

Preferred stock, 7% cumulative and convertible with $100 par value,

50,000 shares authorized, 750,000 shares issued and 1,000,000 outstanding $4,000,000

Common stock, class A $3 par value, 1,400,000 shares authorized,

800,000 shares issued and 1,500,000 outstanding $1,260,000

Additional paid in capital - common stock $12,600,000

Additional paid in capital - preferred stock $3,400,000

Total Paid in Capital $21,260,000

Retained Earnings $20,600,000

Less: Treasury Stock (20,000 shares) ($7,200,000)

Total Stockholder's Equity $34,660,000

No dividends were declared or paid during the year 2020 due to poor economic conditions.

Consider the following events in preparing a Statement of Stockholder's Equity and earnings per share for the year 2021.

Date Event

1/31/2021 The company authorized and issued $3 million 10-year 8% convertible bonds at 99 with interest to be paid annually on January 1.

Each $1,000 bond is convertible into 2 common shares. The company uses the straight-line amortization method.

2/1/2021 The company reissued 6,000 shares of treasury stock at $320 per share.

3/31/2021 On March 31, 2021, the company granted 5 executive employees the option to purchase 150,000 shares (30,000 shares each) ofcommon stock at $120 per share.

The Black-Scholes option pricing model determines total compensation expense to be $500,000. The option becomes exercisable on March 31, 2022, after

the employee completed two years of service. The market price of the company's stock was $358 on March 31, 2021.

4/1/2021 The company repurchased 1,000 common shares of treasury stock at $340 per share.

5/1/2021 The company reissued 18,000 shares of the treasury stock at $380 per share.

6/30/2021 The board of directors declared a 3:1 stock split on common shares.

8/1/2021 The company converted 15,000 shares of 7% cumulative convertible preferred stock, $100 par value. Each share is convertible into 8 shares of common stock.

9/30/2021 One of the executives receiving the stock options was fired and left the company

10/15/2021 The company declared a 5% stock dividend to all common stockholders of record.The market value of the common stock is $176 per share

12/15/2021 1,000 convertible bonds were converted to 2 common shares each. The company paid a conversion fee of $78,000 to the bondholders.

12/20/2021 The board of directors declared the preferred stock dividend and a dividend of $.50 per share on the common stock.

12/31/2021 The market value of the company's common stock is $180 per share.

The company's net income for 2021 is $1,988,000 -- BEFORE any of the above transactions, adjustments or interest

and dividend calculations. The income tax rate is 25%.

Complete the following in EXCEL prepared in GOOD FORM and using formulas. Organize the analysis appropriately to:

Prepare the company's Statement of Stockholder's Equity in good form

Compute Earnings per Share