P3-9 Changes in stockholders' equity Listed are the equity sections of balance sheets for years 2018 and 2019 as reported by Mountain Air Ski Resorts Inc. The overall value of stockholders' equity has risen from $2,000,000 to $7,500,000. Use the statements to discover how and why that happened. 2019 Mountain Air Ski Resorts Inc. Balance Sheets (partial) Stockholders' equity 2018 Common stock ($1.00 par) Authorised: 5,000,000 shares Outstanding 1,500,000 shares 2019 500,000 shares 2018 $ 500,000 Paid-in capital in excess of par 500,000 Retained earnings 1,000,000 Total stockholders' equiry $2,000,000 $1,500,000 4,500,000 1,500,000 $7,500,000 The company paid total dividends of $200,000 during fiscal 2019. 2. What was Mountain Air's net income for fiscal 2019? b. How many new shares did the corporation issue and sell during the year? c. At what average price per share did the new stock sold during 2019 sell? d. At what price per share did Mountain Air's original 500,000 shares sell? P3-2 Income statement preparation On December 31, 2019, Cathy Chen, a self- employed certified public accountant (CPA), completed her first full year in busi- ness. During the year, she charged her clients $360,000 for accounting services. She had two employees, a bookkeeper and a clerical assistant. In addition to her monthly salary of $8,000, Ms. Chen paid annual salaries of $48,000 and $36,000 to the bookkeeper and the clerical assistant, respectively. Employment taxes and benefit costs for Ms. Chen and her employees totaled $34,600 for the year. Expenses for office supplies, including postage, totaled $10,400 for the year. In addition, Ms. Chen spent $17,000 during the year on tax-deductible travel and entertainment associated with client visits and new business develop- ment. Lease payments for the office space rented (a tax-deductible expense) were $2,700 per month. Depreciation expense on the office furniture and fixtures was $15,600 for the year. During the year, Ms. Chen paid interest of $15,000 on the $120,000 borrowed to start the business. She paid an average tax rate of 30% during 2019. a. Prepare an income statement for Cathy Chen, CPA, for the year ended December 31, 2019. b. Evaluate her 2019 financial performance. P3-7 Initial sale price of common stock Hudson-Perry Recordings Inc. has one issue of preferred stock and one issue of common stock outstanding. Given their stockholders' equity account that follows, determine the original price per share at which the firm sold its single issue of common stock. Stockholders' Equity (5000) Preferred stock Cominon stock (50.10 par, 1,400,000 shares outstanding) Paid-in capital in excess of par on common stock Retained camings Total stockholders' equity $ 225 140 19,460 1.800 $21,625 P3-8 Statement of retained earnings Hayes Enterprises began 2019 with a retained earn. ings balance of 5928,000. During 2019, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. At year-end 2019, the firm's retained earnings totaled $1,048,000. The firm had 140,000 shares of common stock outstanding during 2019. a. Prepare a statement of retained earnings for the year ended December 31, 2019, for Hayes Enterprises. (Note: Be sure to calculate and include the amount of cash dividends paid in 2019.) b. Calculate the firm's 2019 earnings per share (EPS). c. How large a per-share cash dividend did the firm pay on common stock during 2019? P3-9 Changes in stockholders' equity Listed are the equity sections of balance sheets for years 2018 and 2019 as reported by Mountain Air Ski Resorts Inc. The overall value of stockholders' equity has risen from $2,000,000 to $7,500,000. Use the statements to discover how and why that happened. 2019 Mountain Air Ski Resorts Inc. Balance Sheets (partial) Stockholders' equity 2018 Common stock ($1.00 par) Authorised: 5,000,000 shares Outstanding 1,500,000 shares 2019 500,000 shares 2018 $ 500,000 Paid-in capital in excess of par 500,000 Retained earnings 1,000,000 Total stockholders' equiry $2,000,000 $1,500,000 4,500,000 1,500,000 $7,500,000 The company paid total dividends of $200,000 during fiscal 2019. 2. What was Mountain Air's net income for fiscal 2019? b. How many new shares did the corporation issue and sell during the year? c. At what average price per share did the new stock sold during 2019 sell? d. At what price per share did Mountain Air's original 500,000 shares sell? P3-2 Income statement preparation On December 31, 2019, Cathy Chen, a self- employed certified public accountant (CPA), completed her first full year in busi- ness. During the year, she charged her clients $360,000 for accounting services. She had two employees, a bookkeeper and a clerical assistant. In addition to her monthly salary of $8,000, Ms. Chen paid annual salaries of $48,000 and $36,000 to the bookkeeper and the clerical assistant, respectively. Employment taxes and benefit costs for Ms. Chen and her employees totaled $34,600 for the year. Expenses for office supplies, including postage, totaled $10,400 for the year. In addition, Ms. Chen spent $17,000 during the year on tax-deductible travel and entertainment associated with client visits and new business develop- ment. Lease payments for the office space rented (a tax-deductible expense) were $2,700 per month. Depreciation expense on the office furniture and fixtures was $15,600 for the year. During the year, Ms. Chen paid interest of $15,000 on the $120,000 borrowed to start the business. She paid an average tax rate of 30% during 2019. a. Prepare an income statement for Cathy Chen, CPA, for the year ended December 31, 2019. b. Evaluate her 2019 financial performance. P3-7 Initial sale price of common stock Hudson-Perry Recordings Inc. has one issue of preferred stock and one issue of common stock outstanding. Given their stockholders' equity account that follows, determine the original price per share at which the firm sold its single issue of common stock. Stockholders' Equity (5000) Preferred stock Cominon stock (50.10 par, 1,400,000 shares outstanding) Paid-in capital in excess of par on common stock Retained camings Total stockholders' equity $ 225 140 19,460 1.800 $21,625 P3-8 Statement of retained earnings Hayes Enterprises began 2019 with a retained earn. ings balance of 5928,000. During 2019, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. At year-end 2019, the firm's retained earnings totaled $1,048,000. The firm had 140,000 shares of common stock outstanding during 2019. a. Prepare a statement of retained earnings for the year ended December 31, 2019, for Hayes Enterprises. (Note: Be sure to calculate and include the amount of cash dividends paid in 2019.) b. Calculate the firm's 2019 earnings per share (EPS). c. How large a per-share cash dividend did the firm pay on common stock during 2019