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Oakwood Inc. is a public enterprise whose shares are traded in the over-the-counter market. At December 31, 2015, Oakwood had 6,000,000 authorized shares of $10
Oakwood Inc. is a public enterprise whose shares are traded in the over-the-counter market. At December 31, 2015, Oakwood had 6,000,000 authorized shares of $10 par value common stock, of which 2,000,000 shares were issued and outstanding. The shareholders' equity accounts at December 31, 2015, had the following balances:
Common stock | $20,000,000 | |
Additional paid-in capital on common stock | 7,500,000 | |
Retained earnings | 6,470,000 |
Transactions during 2016 and other information relating to the shareholders' equity accounts were as follows:
- On January 5, 2016, Oakwood issued at $54 per share, 100,000 shares of $50 par value, 9%, cumulative convertible preferred stock. Each share of preferred stock is convertible, at the option of the holder, into 2 shares of common stock. Oakwood had 600,000 authorized shares of preferred stock.
- On February 2, 2016, Oakwood reacquired 20,000 shares of its common stock for $16 per share. Oakwood uses the cost method to account for treasury stock.
- On April 27, 2016, Oakwood sold 500,000 shares (previously unissued) of $10 par value common stock to the public at $17 per share.
- On June 18, 2016, Oakwood declared a cash dividend of $1 per share of common stock, payable on July 13, 2016, to shareholders of record on July 2, 2016.
- On November 9, 2016, Oakwood sold 10,000 shares of treasury stock for $21 per share.
- On December 14, 2016, Oakwood declared the yearly cash dividend on preferred stock, payable on January 14, 2017, to shareholders of record on December 31, 2016.
- On January 18, 2017, before the books were closed for 2016, Oakwood became aware that the ending inventories at December 31, 2015, were understated by $300,000 (the after-tax effect on 2015 net income was $210,000). The appropriate correcting entry was recorded the same day.
- After correcting the beginning inventory, net income for 2016 was $4,500,000.
Required:
1. Prepare the shareholders' equity section of Oakwood's balance sheet at December 31, 2016.
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