McMinn Publications was organized early in 2016 with authorization to issue 20,000 shares of $100 par value preferred stock and 1 million shares of $1 par value common stock. All of the preferred stock was issued at par, and 300,000 shares of common stock were sold for $20 per share. The preferred stock pays a 10 percent cumulative dividend.

During the first five years of operations (2016 through 2020) the corporation earned a total net income of $4,560,000 and paid dividends of $1 per share each year on the common stock. In 2021, however, the corporation reported a net loss of $1,825,000 and paid no dividends.

Required:

a. Prepare the stockholders equity section of the balance sheet at December 31, 2021.

c. Do the dividends in arrears appear as a liability of the corporation as of the end of 2021?

• Required A
• Required C

Prepare the stockholders equity section of the balance sheet at December 31, 2021.

MCMINN PUBLICATIONS
Partial Balance Sheet
December 31, 2021
Stockholders' equity
Common stock, $1 par value, authorized 1 million shares issued and outstanding 300,000 shares		$300,000
10% cumulative preferred stock, $100 par value, authorized 100,000 shares, issued and outstanding 20,000 shares		2,000,000
Additional paid-in capital: common stock		5,700,000
Total paid-in capital		$8,000,000
Retained earnings
?		?
		?
Retained earnings, December 2020		?
Less: Net loss of 2021		?
Retained earnings, December 31, 2021		?
Total stockholders' equity		$8,000,000

• Do the dividends in arrears appear as a liability of the corporation as of the end of 2021

  Do the dividends in arrears appear as a liability of the corporation as of the end of 2021?	No