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Major Company You are engaged in an audit of the Major Company. There are major issues concerning the correctness of their equity accounts as a

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Major Company You are engaged in an audit of the Major Company. There are major issues concerning the correctness of their equity accounts as a result of a variety of equity transactions that occurred during 20x1, 20x2 and 20x3. You have been asked to correctly determine the amounts that should exist in each of the stockholders' equity accounts. Your end product should be a statement of changes in stockholders' equity. I would suggest you have the following columns Number of common shares Common stock par (dollar amount) Common stock subscribed Paid-in excess of par Paid-in excess-retirement Paid-in excess -sale of treasury stock Retained earnings Subscriptions receivable Treasury stock at cost Treasury stock-number of shares You are asked to maintain the detailed paid-in excess accounts even though the final equity section of the balance sheet will show only one summary paid-in excess account. Here is the information you have found: 1. On January 1, 20x1, there were 1,000,000 $1 par shares authorized, 500,000 had been issued for an average price of $20 per share. The retained earnings balance was $1,500,000. 2. June 30, 20x1, 50,000 additional shares were issued for $25 per share 3. September 1, 20x1, 15,000 treasury shares purchased for $31 each. The treasury stock at cost method is used. These shares were from those issued on June 30. 4. Net income reported for 20xl was $500,000 5. December 31, 20x1, a $.50 per share cash dividend was declared, it was paid in January of 20x2. 6. On January 15, 20x2, 10,000 additional shares were subscribed to at $34 per share. 50% was paid down in cash with the remaining balance due on January 15, 20x3. These shares will not be receiving cash dividends, but will share in stock splits and stock dividends... 7. February 1, 20x2, 5,000 shares of treasury stock sold for $35 each. 8. March 1, 20x2, 5,000 shares of treasury stock are sold for $28 each and the remaining shares of treasury stock were retired. You may assume the shares retired are from the original issuance. 9. May 1, 20x2, retire 8,000 shares by purchasing them on the market that day when the market value per share was $25. You may assume the shares retired are from the original issuance. 10. Oct. 1, 20x2, declared a 2 for 1 stock split. 11. Net income reported for 20x2 was $900,000 12. On January 15, collected the balance due from the subscribers and issued them their now 20,000 shares (from the stock split) 13. March 1, 20x3, retire 3,000 shares by purchasing them on the market that day for $12 each. You may assume the shares retired are from the original issuance, not from the June 20xl issuance and take into consideration the stock split in 20X2. 14. April 1, 20x3, declare and distributed a 5% stock dividend when market value per share was $15. 15. On December 15 declared a property dividend. One share of XYZ International will be distributed to for each 50 shares owned. Major company has 50,000 shares of XYZ that they purchase years ago at a price of $8 per share. XYZ is currently trading at $12 per share. The property dividend will be paid on January 4 to stockholders of record on December 28th 16. Net income reported for 20x3 was $900,000 prior to including any impact of item 15 above ent they will be balance shaders' equity the De Required: 1. Complete your statement of changes in stockholders' equity for 20xl (be sure to calculate year end totals, they will be your starting point for 20x2) and prepare the equity section of Major's Dec. 31, 20x1 balance sheet. 2. Continue your statement of changes in stockholders' equity for 20x2 and arrive at totals as of December 31, 20x2. Prepare the equity section of the December 31, 2002 balance sheet. 3. Continue your statement of changes in stockholders' equity for 20x3 and arrive at totals as of December 31, 20x3. Prepare the equity section of the December 31, 20x3 balance sheet Major Company You are engaged in an audit of the Major Company. There are major issues concerning the correctness of their equity accounts as a result of a variety of equity transactions that occurred during 20x1, 20x2 and 20x3. You have been asked to correctly determine the amounts that should exist in each of the stockholders' equity accounts. Your end product should be a statement of changes in stockholders' equity. I would suggest you have the following columns Number of common shares Common stock par (dollar amount) Common stock subscribed Paid-in excess of par Paid-in excess-retirement Paid-in excess -sale of treasury stock Retained earnings Subscriptions receivable Treasury stock at cost Treasury stock-number of shares You are asked to maintain the detailed paid-in excess accounts even though the final equity section of the balance sheet will show only one summary paid-in excess account. Here is the information you have found: 1. On January 1, 20x1, there were 1,000,000 $1 par shares authorized, 500,000 had been issued for an average price of $20 per share. The retained earnings balance was $1,500,000. 2. June 30, 20x1, 50,000 additional shares were issued for $25 per share 3. September 1, 20x1, 15,000 treasury shares purchased for $31 each. The treasury stock at cost method is used. These shares were from those issued on June 30. 4. Net income reported for 20xl was $500,000 5. December 31, 20x1, a $.50 per share cash dividend was declared, it was paid in January of 20x2. 6. On January 15, 20x2, 10,000 additional shares were subscribed to at $34 per share. 50% was paid down in cash with the remaining balance due on January 15, 20x3. These shares will not be receiving cash dividends, but will share in stock splits and stock dividends... 7. February 1, 20x2, 5,000 shares of treasury stock sold for $35 each. 8. March 1, 20x2, 5,000 shares of treasury stock are sold for $28 each and the remaining shares of treasury stock were retired. You may assume the shares retired are from the original issuance. 9. May 1, 20x2, retire 8,000 shares by purchasing them on the market that day when the market value per share was $25. You may assume the shares retired are from the original issuance. 10. Oct. 1, 20x2, declared a 2 for 1 stock split. 11. Net income reported for 20x2 was $900,000 12. On January 15, collected the balance due from the subscribers and issued them their now 20,000 shares (from the stock split) 13. March 1, 20x3, retire 3,000 shares by purchasing them on the market that day for $12 each. You may assume the shares retired are from the original issuance, not from the June 20xl issuance and take into consideration the stock split in 20X2. 14. April 1, 20x3, declare and distributed a 5% stock dividend when market value per share was $15. 15. On December 15 declared a property dividend. One share of XYZ International will be distributed to for each 50 shares owned. Major company has 50,000 shares of XYZ that they purchase years ago at a price of $8 per share. XYZ is currently trading at $12 per share. The property dividend will be paid on January 4 to stockholders of record on December 28th 16. Net income reported for 20x3 was $900,000 prior to including any impact of item 15 above ent they will be balance shaders' equity the De Required: 1. Complete your statement of changes in stockholders' equity for 20xl (be sure to calculate year end totals, they will be your starting point for 20x2) and prepare the equity section of Major's Dec. 31, 20x1 balance sheet. 2. Continue your statement of changes in stockholders' equity for 20x2 and arrive at totals as of December 31, 20x2. Prepare the equity section of the December 31, 2002 balance sheet. 3. Continue your statement of changes in stockholders' equity for 20x3 and arrive at totals as of December 31, 20x3. Prepare the equity section of the December 31, 20x3 balance sheet

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