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The post-closing trial balance of Storey Corporation at December 31, 2017, contains the following stockholders equity accounts. Preferred Stock (15,500 shares issued) $775,000 Common Stock
The post-closing trial balance of Storey Corporation at December 31, 2017, contains the following stockholders equity accounts.
Preferred Stock (15,500 shares issued) | $775,000 | |
Common Stock (259,000 shares issued) | 3,885,000 | |
Paid-in Capital in Excess of ParPreferred Stock | 259,000 | |
Paid-in Capital in Excess of ParCommon Stock | 407,000 | |
Common Stock Dividends Distributable | 388,500 | |
Retained Earnings | 845,800 |
A review of the accounting records reveals the following.
1. | No errors have been made in recording 2017 transactions or in preparing the closing entry for net income. | |
2. | Preferred stock is $50 par, 6%, and cumulative; 15,500 shares have been outstanding since January 1, 2016. | |
3. | Authorized stock is 20,500 shares of preferred, 518,000 shares of common with a $15 par value. | |
4. | The January 1 balance in Retained Earnings was $1,120,000. | |
5. | On July 1, 19,200 shares of common stock were issued for cash at $16 per share. | |
6. | On September 1, the company discovered an understatement error of $89,000 in computing salaries and wages expense in 2016. The net of tax effect of $62,300 was properly debited directly to Retained Earnings. | |
7. | A cash dividend of $388,500 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2016. | |
8. | On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $16. | |
9. | Net income for the year was $591,000. | |
10. | On December 31, 2017, the directors authorized disclosure of a $194,000 restriction of retained earnings for plant expansion. (Use Note X.) |
Reproduce the Retained Earnings account for 2017.
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