Question
The stockholders' equity accounts ofIndigo Corporationon January 1, 2022, were as follows. Preferred Stock (7%, $100par noncumulative,10,000shares authorized)$600,000 Common Stock ($4stated value,600,000shares authorized) 2,000,000 Paid-in
The stockholders' equity accounts ofIndigo Corporationon January 1, 2022, were as follows.
Preferred Stock (7%, $100par noncumulative,10,000shares authorized)$600,000
Common Stock ($4stated value,600,000shares authorized) 2,000,000
Paid-in Capital in Excess of Par ValuePreferred Stock 30,000
Paid-in Capital in Excess of Stated ValueCommon Stock 960,000
Retained Earnings 1,376,000
Treasury Stock (10,000common shares) 80,000
During 2022, the corporation had the following transactions and events pertaining to its stockholders' equity.
Feb.1 Issued10,000shares of common stock for $60,000.
Mar.20 Purchased2,000additional shares of common treasury stock at $7per share.
Oct.1 Declared a7% cash dividend on preferred stock, payable November 1.
Nov.1 Paid the dividend declared on October 1.
Dec.1 Declared a $0.50per share cash dividend to common stockholders of record on December 15, payable December 31,
Dec.31 Determined that net income for the year was $550,000. Paid the dividend declared on December 1.
Part 1 Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)(Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Part 2Enter the beginning balances in the accounts and post the journal entries to the stockholders' equity accounts.(Post entries in the order of journal entries posted in the previous part. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)
Part 3 Make the stockholders' equity section of the balance sheet at December 31, 2022.
INDIGO CORPORATION
Partial Balance Sheet
December 31, 2022
Part 4 Calculate the payout ratio, earnings per share, and return on common stockholders' equity. (Note:Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)(Round answers to 2 decimal places, e.g 17.50%.)
Payout ratio %
Earnings per share $
Return on common stockholders' equity %
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