Francesca and Sophia have decided to convert HHEC from a sole proprietorship to a corporation. During the year, HHEC Corp. issues common stock and pays dividends on that common stock. Sophia gives you a list of transactions to record the entries for the issuance of common stock and the payment of cash dividends. At the end of Year 2, Sophia and Francesca would like to know how much is in retained earnings HHEC Corp. and what the ending value of stockholders equity is.

HHEC Task 1: Francesca and Sophia have decided to convert HHEC from a sole proprietorship to a corporation. During the year, HHEC Corp. issues common stock and pays dividends on that common stock. Sophia gives you a list of transactions to record the entries for the issuance of common stock and the payment of cash dividends. At the end of Year 2, Sophia and Francesca would like to know how much is in retained earnings HHEC Corp. and what the ending value of stockholders' equity is. HAPPY HOME Environmental Cleaning A. On January 1, Year 2, HHEC Corporation issues 10,000 shares of $100 par 10% preferred stock for $100 per share B. On January 1, Year 2 HHEC Corporation issues 25, 000 shares of $20 par value common stock with a par value of $20, for $25 per share C. On March 1, Year 2, HHEC declares a $1 cash dividend per share on its common stock, to stockholders of record on March 15, payable April 1. D. On March 1, Year 2, HHEC declared a 10% cash dividend on its preferred stock payable March 15. E. On June 1, Year 2, HHEC declared a 15% Common stock dividend to stockholders of record on June 15, distributable June 30. The market price of the stock was $30 per share. F. HHEC earned net income for Year 2 of $255,000 For Part A please journalize the transactions. Please note there is Task 1B on next tab. ANSWER HHEC Task 1b: At the end of Year 2, Sophia and Francesca would like to know how much is in retained earnings HHEC Corp. and what the ending value of stockholders' equity is. HAPPY HOME Environmental Cleaning Using your journal entries from Task 1a: B) Prepare a statement of Retained Earnings, assuming the beginning balance is $35,000 C) Prepare a Stockholders Equity section Answer: HHEC Corporation Statement of Retained Earnings For the year ended December 31, Year 2 HHEC Corporation Balance Sheet (partial) For the year ended December 31, Year 2