Question
The post-closing trial balance of Storey Corporation at December 31, 2017, contains the following stockholders equity accounts. Preferred Stock (14,300 shares issued)= $715,000 Common Stock
The post-closing trial balance of Storey Corporation at December 31, 2017, contains the following stockholders equity accounts. Preferred Stock (14,300 shares issued)= $715,000
Common Stock (244,000 shares issued) = 3,660,000
Paid-in Capital in Excess of ParPreferred Stock = 244,000
Paid-in Capital in Excess of ParCommon Stock = 417,000
Common Stock Dividends Distributable= 366,000
Retained Earnings = 848,960
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; 14,300 shares have been outstanding since January 1, 2016. | |
3. | Authorized stock is 19,300 shares of preferred, 488,000 shares of common with a $15 par value. | |
4. | The January 1 balance in Retained Earnings was $1,110,000. | |
5. | On July 1, 20,500 shares of common stock were issued for cash at $16 per share. | |
6. | On September 1, the company discovered an understatement error of $85,200 in computing salaries and wages expense in 2016. The net of tax effect of $59,640 was properly debited directly to Retained Earnings. | |
7. | A cash dividend of $366,000 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 $555,000. | |
10. | On December 31, 2017, the directors authorized disclosure of a $191,000 restriction of retained earnings for plant expansion. (Use Note X.) |
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