The stockholders equity of Joe Finance, Ltd. at January 1st, 2021 is as follows: Joe Finance, Ltd Stockholders equity

1 January 2021 Common stock, $2 par value 2.000.000

Additional paid in capital common stocks 5.000.000

Retained earnings 2.000.000

Total stockholders Equity 9.000.000

On 1st of January 2021, the company JOE FINANCE Ltd. Issued 10 years 6% Bonds for $20,000,000. The bonds were sold for $21,000,000 and imply interests payment twice a year, every June 31st and December 31st.

On 20th of June, the company issued $1,000,000 10% non cumulative preferred stocks for $1,050,000

On 24th of June, the company purchased 100,000 treasury stock at a price of $15 per share

On July 15, the company reissued 90,000 of its treasury stocks for $17 per share

The company expects an income before interests and taxes of $2,500,000 at December 31, 2021

Corporation tax is at a 25% rate

1. Record the transactions of the company on the General Journal (10 points)

2. Calculate the average issuance price of the common stocks at January 1, 2021. (10 points)

3. Prepare the income statement of the company starting from the income from operating activities of $2,500,000. 

4. Prepare the stockholders equity section of the balance sheet at December 31, 2021 (10 points)

5. Calculate the maximum dividend / share of common stock at December 31, 2021 (10 points)

6. Consider that instead of issuing bonds, the company had issued for $20,000,000 6% non-cumulative preferred stocks.