1. The stockholders equity of Zhang Corporation at December 31 follows.

5% preferred stock, $100 par value, 8,000 shares authorized; 3,200 shares issued and outstanding	$320,000
Common stock, $5 par value, 160,000 shares authorized; 40,000 shares issued and outstanding	200,000
Paid-in capital in excess of par valuePreferred stock	32,000
Paid-in capital in excess of par valueCommon stock	240,000
Retained earnings	524,800
Total stockholders equity	$1,316,800

The following transactions occurred during the following year.

Apr. 1	Declared and issued a 100% stock dividend on all outstanding shares of common stock when the market value of the stock was $11 per share.
Dec. 7	Declared and issued a 3% stock dividend on all outstanding shares of common stock when the market value of the stock was $7 per share.
Dec. 31	Declared and paid a cash dividend of $1.20 per share on all outstanding common shares.

Required Show the financial impact of each transaction using the financial statement effects template. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount.

	Balance Sheet									Income Statement
	Cash		Noncash				Contrib.		Earned					Net
Transaction	Asset	+	Assets	=	Liabilities	+	Capital	+	Capital	Revenues	-	Expenses	=	Income
(1) Apr. 1 Declared a 100% stock dividend.*	Answer		Answer		0		Answer		Answer	Answer		Answer		Answer
	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	=	N/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	-	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	=
(2) Dec. 7 Declared a 3% stock dividend.**	Answer		Answer		0		Answer		Answer	Answer		Answer		Answer
	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	=	N/A		Common stock		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	-	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	=
							Answer
							AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A
(3) Dec. 31 Declared and paid a cash dividend.***	Answer		Answer		0		Answer		Answer	Answer		Answer		Answer
	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	=	N/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A		AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	-	AnswerCashCommon stockAdditional paid-in capitalTreasury stockRetained earningsN/A	=

In its 2020 10-K, Fastenal Company and Subsidiaries reported the following items ($ millions):

Sales	$4,517.8
Net earnings	687.3
Earnings before income taxes	906.2
Foreign currency translation adjustment (net of tax)	13.8
Accumulated other comprehensive (loss), Dec. 31, 2020	(17.0)
Accumulated other comprehensive (loss), Dec. 31, 2019	(30.7)
Total stockholders equity, Dec. 31, 2020	2,186.6

a. Prepare a statement of comprehensive income that would immediately follow the companys income statement.

Fastenal Company and Subsidiaries
Consolidated Statement of Comprehensive Income
For the Year Ended December 31, 2020 ($ millions)
AnswerSalesNet earningsEarnings before income taxesForeign currency translation adjustment (net of tax)Accumulated other comprehensive (loss), Dec. 31 2020Accumulated other comprehensive (loss), Dec. 31 2019Total stockholders equity, Dec. 31 2020Comprehensive incomeOther comprehensive income	Answer
Other comprehensive income (loss), net of tax:
AnswerSalesNet earningsEarnings before income taxesForeign currency translation adjustment (net of tax)Accumulated other comprehensive (loss), Dec. 31 2020Accumulated other comprehensive (loss), Dec. 31 2019Total stockholders equity, Dec. 31 2020Comprehensive incomeOther comprehensive income	Answer
AnswerSalesNet earningsEarnings before income taxesForeign currency translation adjustment (net of tax)Accumulated other comprehensive (loss), Dec. 31 2020Accumulated other comprehensive (loss), Dec. 31 2019Total stockholders equity, Dec. 31 2020Comprehensive incomeOther comprehensive income	Answer

b. Prepare a reconciliation of accumulated other comprehensive income that would be included as part of the companys statement of stockholders equity.

Accumulated Other Comprehensive Income (Loss) Reconciliation
For the Year Ended December 31, 2020 ($ millions)
AnswerSalesNet earningsEarnings before income taxesForeign currency translation adjustment (net of tax)Accumulated other comprehensive (loss), Dec. 31 2020Accumulated other comprehensive (loss), Dec. 31 2019Total stockholders equity, Dec. 31 2020Comprehensive incomeOther comprehensive income	Answer
Other comprehensive income (loss)	Answer
AnswerSalesNet earningsEarnings before income taxesForeign currency translation adjustment (net of tax)Accumulated other comprehensive (loss), Dec. 31 2020Accumulated other comprehensive (loss), Dec. 31 2019Total stockholders equity, Dec. 31 2020Comprehensive incomeOther comprehensive income	Answer

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2. Accounting for Convertible Debt Kallapur, Inc., has issued convertible debentures: each $2,000 bond is convertible into 400 shares of $1 par common stock. Assume that the bonds were sold at a discount and that each bond has a current unamortized discount equal to $300. Required Using the financial statement effects template, illustrate the effects of the conversion of one of its bonds. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount.

	Balance Sheet											Income Statement
	Cash		Noncash				Contra		Contrib.		Earned					Net
Transaction	Asset	+	Assets	=	Liabilities	-	Liabilities	+	Capital	+	Capital	Revenues	-	Expenses	=	Income
Conversion of bond into common shares	Answer		Answer		Answer		Answer		Answer		Answer	Answer		Answer		Answer
	AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A		AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A	=	AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A	-	AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A		Common stock		AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A	AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A	-	AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A	=
									Answer
									AnswerCashAdditional paid-in capitalBonds discountBonds payableBonds premiumCommon stockRetained earningsTreasury stockN/A