Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lynbrook, Inc. was formed on January 2, 2017 with the authorization to issue 600,000 shares of $2 par value common stock and 50,000 shares of

Lynbrook, Inc. was formed on January 2, 2017 with the authorization to issue 600,000 shares of $2 par value common stock and 50,000 shares of $100 par value 5% cumulative preferred stock. During 2017, all the preferred stock was issued at par, and 400,000 shares of common stock were sold for $25 per share.

During its first five years of business (2017 through 2021), the company earned income totaling $5,500,000 and paid dividends of 30 cents per share each year on the common stock outstanding.

On January 2, 2019, the company purchased 50,000 shares of its own common stock in the open market for $600,000. On January 2, 2020, it reissued 20,000 shares of this treasury stock for $300,000. The remaining 30,000 were still held in treasury at December 31, 2021.

Requirements:

1. Management would like you to prepare the stockholders equity section of the Balance Sheet for Lynbrook, Inc. at December 31, 2021. They also asked that you provide supporting detail for all of the numbers in your stockholders equity section.

2. Lynbrook is considering awarding common stock a 2-for-1 stock split in early 2022.

Management has asked you to describe what will happen to the following items:

Market price (currently $40/share)

Par value

Number of shares of common stock

- Authorized

- Issued

- Outstanding

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The ASQ Certified Quality Auditor Handbook

Authors: Lance B Coleman

5th Edition

1951058097, 978-1951058098

More Books

Students also viewed these Accounting questions

Question

Does it have at least one-inch margins?

Answered: 1 week ago

Question

Does it have correct contact information?

Answered: 1 week ago

Question

Does it exceed two pages in length?

Answered: 1 week ago