Martin Luther Inc company was formed April 1, 2015. It was authorized to issue 350,000 of $10 par value common stock and 150,000 shares of 4% $25 par value, cumulative & nonparticipating preferred stock. Martin Luther Inc's fiscal year end is March 30th.

Information relative to the stockholder's equity accounts of the Martin Luther Inc Company follows below:

Common stock

Prior to 2017-2018 fiscal year, Martin Luther Inc Company 180,000 shares of outstanding common stock issued as follows:

1. 100,000 shares were issued for cash April 1, 2015, at $20/share

2. On September 20, 2015 Martin Luther Inc issued additional 70,000 shares for cash, at $30/share

3. On June 7, 2016 Martin Luther Inc exchanged 10,000 shares for a plot of land which cost the seller $100,000 and had an estimated fair value of $250,000 on June 7, 2016.

During 2017-2018 following transactions took place:

September 15, 2017 The company purchased 2,000 shares of its own stock at $40/share. The company uses cost method to account for the treasury stock.

November 20, 2017 The company declared 10% stock dividend for stockholders of record December 20, 2017 to be issued January 1, 2018. Martin Luther Inc's common stock was selling at $45/share.

February 15, 2018 The company sold 1,000 shares of its own common stock it had purchased on September 15, 2017 for $30,000.

Preferred stock

Martin Luther Inc issued 60,000 shares of preferred stock at $45/share on April 1, 2016.

Cash Dividends:

Martin Luther Inc has followed a schedule of declaring cash dividends in October and March, with payment being made to stockholders of record in the following month. Cash dividends which have been declared since the inception of the company through March 2018 are shown below:

BACC 513 Spring 2018 Take home exam

Declaration Date

10/15/16

3/15/17

10/15/17

No cash dividends were declared during March 2018, due to the company's liquidity problems

As of March 31, 2017 Martin Luther Inc retained earnings had a balance of $900,000. For the fiscal year ending March 30, 2018, company reported net income of 70,000.

Instructions:

Necessary journal entries and corresponding T-accounts. Prepare the stockholders' equity section of the balance sheet, including appropriate notes as of March 31, 2018 for the Martin Luther Inc company as it should appear in its annual report to the shareholders.