The post-closing trial balance of Dondec Corporation at December 31, 2014, contains these stockholders equity accounts. Preferred

Question:

The post-closing trial balance of Dondec Corporation at December 31, 2014, contains these stockholders’ equity accounts.

Preferred Stock (6,000 shares issued).................$ 300,000

Common Stock (350,000 shares issued) ..................3,500,000

Paid-in Capital in Excess of Par Value—Preferred Stock..........250,000

Paid-in Capital in Excess of Par Value—Common Stock..........520,000

Retained Earnings..........................720,000

A review of the accounting records reveals this information:

1Preferred stock is $50 par, 10%, and cumulative; 6,000 shares have been outstanding since January 1, 2013.

2Authorized stock is 20,000 shares of preferred and 500,000 shares of common with a $10 par value.

3The January 1, 2014, balance in Retained Earnings was $800,000.

4On July 1, 20,000 shares of common stock were sold for cash at $16 per share.

5A cash dividend of $380,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2013.

6Net income for the year was $300,000.

7On December 31, 2014, the directors authorized disclosure of a $150,000 restriction of retained earnings for plant expansion. (Use Note X.)

Instructions

(a) Reproduce the Retained Earnings account (T-account) for the year.

(b) Prepare the stockholders’ equity section of the balance sheet at December 31.

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