No dividends were declared or paid during the year 2020 due to poor economic conditions. Consider the following events in preparing a Statement of Stockholders Equity and earnings per share for the year 2021.
The companys net income for 2021 is $1,988,000 -- BEFORE any of the above transactions, adjustments or interest and dividend calculations. The income tax rate is 25%.
$4,000,000 Dragon Corporation Statement of Stockholder's Equity 31-Dec-20 Preferred stock, 7% cumulative and convertible with $100 par value, 50,000 shares authorized, 750,000 shares issued and 1,000,000 outstanding Common stock, class A $3 par value, 1,400,000 shares authorized, 800,000 shares issued and 1,500,000 outstanding Additional paid in capital common stock Additional paid in capital - preferred stock Total Paid in Capital Retained Earnings Less: Treasury Stock (20,000 shares, $360 per share) Total Stockholder's Equity $1,260,000 $12,600,000 $3,400,000 $21,260,000 $20,600,000 ($7,200,000) $34,660,000 1/31/21 2/1/21 3/31/21 4/1/21 5/1/21 The company authorized and issued $3 million 10-year 8% convertible bonds at 99 with interest to be paid annually on January 1. Each $1,000 bond is convertible into 2 common shares. The company uses the straight- line amortization method. The company reissued 6,000 shares of treasury stock at $320 per share. On March 31, 2021, the company granted 5 executive employees the option to purchase 150,000 shares (30,000 shares each) of common stock at $120 per share. The Black-Scholes option pricing model determines total compensation expense to be $500,000. The option becomes exercisable on March 31, 2022, after the employee completed two years of service. The market price of the company's stock was $358 on March 31, 2021. The company repurchased 10,000 common shares of treasury stock at $340 per share. The company reissued 18,000 shares of the treasury stock at $380 per share. The board of directors declared a 3:1 stock split on common shares. The company converted 15,000 shares of 7% cumulative convertible preferred stock, $100 par value. Each share is convertible into 8 shares of common stock. One of the executives receiving the stock options was fired and left the company The company declared a 5% stock dividend to all common stockholders of record. The market value of the common stock is $176 per share 1,000 convertible bonds were converted to 2 common shares each. The company paid a conversion fee of $78,000 to the bondholders. The board of directors declared the preferred stock dividend and a dividend of $.50 per share on the common stock. The market value of the company's common stock is $180 per share. 6/30/21 8/1/21 9/30/21 10/15/21 12/15/21 12/20/21 12/31/21 $4,000,000 Dragon Corporation Statement of Stockholder's Equity 31-Dec-20 Preferred stock, 7% cumulative and convertible with $100 par value, 50,000 shares authorized, 750,000 shares issued and 1,000,000 outstanding Common stock, class A $3 par value, 1,400,000 shares authorized, 800,000 shares issued and 1,500,000 outstanding Additional paid in capital common stock Additional paid in capital - preferred stock Total Paid in Capital Retained Earnings Less: Treasury Stock (20,000 shares, $360 per share) Total Stockholder's Equity $1,260,000 $12,600,000 $3,400,000 $21,260,000 $20,600,000 ($7,200,000) $34,660,000 1/31/21 2/1/21 3/31/21 4/1/21 5/1/21 The company authorized and issued $3 million 10-year 8% convertible bonds at 99 with interest to be paid annually on January 1. Each $1,000 bond is convertible into 2 common shares. The company uses the straight- line amortization method. The company reissued 6,000 shares of treasury stock at $320 per share. On March 31, 2021, the company granted 5 executive employees the option to purchase 150,000 shares (30,000 shares each) of common stock at $120 per share. The Black-Scholes option pricing model determines total compensation expense to be $500,000. The option becomes exercisable on March 31, 2022, after the employee completed two years of service. The market price of the company's stock was $358 on March 31, 2021. The company repurchased 10,000 common shares of treasury stock at $340 per share. The company reissued 18,000 shares of the treasury stock at $380 per share. The board of directors declared a 3:1 stock split on common shares. The company converted 15,000 shares of 7% cumulative convertible preferred stock, $100 par value. Each share is convertible into 8 shares of common stock. One of the executives receiving the stock options was fired and left the company The company declared a 5% stock dividend to all common stockholders of record. The market value of the common stock is $176 per share 1,000 convertible bonds were converted to 2 common shares each. The company paid a conversion fee of $78,000 to the bondholders. The board of directors declared the preferred stock dividend and a dividend of $.50 per share on the common stock. The market value of the company's common stock is $180 per share. 6/30/21 8/1/21 9/30/21 10/15/21 12/15/21 12/20/21 12/31/21
