Max Co. is a publicly held company whose shares are traded in the over-the-counter market. The stockholders equity accounts at December 31, year 3, had the following balances: Preferred stock, $100 par value, 7% cumulative; 6,000 shares authorized; 3,000 issued and outstanding Common stock, $1 par value, 250,000 shares authorized; 200,000 issued and outstanding Additional paid-in capital Retained earnings Total stockholders' equity $ 300,000 200,000 1,100,000 1,768,000 $3,368,000 Transactions during year 4 and other information relating to the stockholders' equity accounts were as follows: February 1, year 4-Issued 15,000 shares of common stock to Ewe Co. in exchange for land. On the date issued, the stock had a market price of $12 per share. The land had a carrying value on Ewe's books of $170,000, and an assessed value for property taxes of $115,000. March 1, year 4 Purchased 6,000 shares of its own common stock to be held as treasury stock for $13 per share. Max uses the cost method to account for treasury stock. Transactions in treasury stock are legal in Max's state of incorporation. May 10, year 4-Declared a property dividend of marketable securities held by Max to common share- holders. The securities had a carrying value of $700,000; fair value on relevant dates were: Date of declaration 5/10 Date of record 5/25 Date of distribution 6/1 $840,000 874,000 856,000 October 1, year 4-Reissued 4,000 shares of treasury stock for $15 per share. November 4, year 4-Declared a cash dividend of $1.10 per share to all common shareholders of record on November 15, year 4. The dividend was paid on November 25, year 4. December 22, year 4-Declared the required annual cash dividend on preferred stock for year 4. The divi- dend was paid on January 5, year 5. January 16, year 5-Before closing the accounting records for year 4, Max became aware that no amor- tization had been recorded for year 3 for a patent purchased on September 1, year 3. The patent was prop erly capitalized at $360,000 and had an estimated useful life of ten years when purchased. Max's income tax rate is 35%. The appropriate correcting entry was recorded on the same day. Adjusted net income for year 4 was $926,000. (5/95, FAR, #2, amended, 5597t) Scanned with CamScanner Items 1 through 4 represent amounts to be reported on Max's year 4 statement of retained earnings. 1. 2. 3. 4. Preferred dividends. Common dividends-cash. Common dividends-property. Prior period adjustment. Items 5 through 8 represent amounts to be reported on Max's statement of stockholders' equity at D ber 31, year 4. 5. 6. 7. 8. Treasury stock. Amount of common stock issued. Number of common shares issued at December 31, year 4. Additional paid-in capital, including treasury stock transactions. Items 9 and 10 represent other financial information for year 3 and year 4. 9. 10. Numerator used in calculation of year 4 earnings per share for the year. Book value per share at December 31, year 3, before prior period adjustment.