Question

12 Chapter 8 In-class Review Sun Corporation received a charter that authorized the issuance of 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 5 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation: 2018 Jan. 5 Sold 6,000 shares of the $10 par common stock for $15 per share. Sold 1,000 shares of the 5 percent preferred stock for $55 per share. Apr. 5 Sold 30,000 shares of the $10 par common stock for $21 per share Dec. 31 During the year, earned $150,000 in cash revenue and paid $88,000 for cash operating expenses Declared the cash dividend on the outstanding shares of preferred stock for 2018. The dividend will be paid on February 15 to stockholders of record on January 10, 2019 2019 Feb. 15 Paid the cash dividend declared on December 31, 2018 Mar. Sold 15,000 shares of the $50 par preferred stock for $53 per share. May Purchased 900 shares of the common stock as treasury stock at $24 per share. Dec. 31 During the year, earned $210,000 in cash revenues and paid $98,000 for cash operating expenses. Declared the annual dividend on the preferred stock and a $0.50 per share dividend on the common stock 31 (1) Record the impact of the above transactions on the horizontal finanaical statements of Sun Corporation. (other side) (2) Prepare the Stockholders' Equity section of the Balance Sheet ofr Sun Corproation Sun Corporation December 31, 2019 Sun Corporation December 31, 2018 Stockholders' Equity Preferred Stock Common Stock Paid in Capital in Excess of Par. Common Paid in Capital in Excess of Par - Preferred Total Paid in Capital Retained Earnings Total Stockholders' Equity

Answer 1

1	Note:- Format of Balance sheet was not given in question
	Particulars	Amount 2019 ($)	Amount 2018 ($)
	Equity and Liabilities
	Common Stock	720,000	720,000
	Less: Treasury Shares	-	(21,600)
	5% Preferred Stock	55,000	850,000
	Retained Earnings	62,000	51,950
	Total Equity	837,000	1,600,350

		Sun Corporation
2
	Particulars	31-Dec-18		31-Dec-19
	Stockholder's Equity
	Preferred Stock - Jan 12, 2018	50,000		50,000
	Preferred Stock - March 3, 2019	-		750,000
	Common Stock - Jan 5, 2018	60,000		60,000
	Common Stock - Apr 5, 2018	300,000		300,000
	Common Stock - May 5, 2019	-		(9,000)
	Paid in Capital in excess of Par - Common (Jan 5, 2018)	30,000		30,000
	Paid in Capital in excess of Par - Common (Apr 5, 2018)	330,000		330,000
	Paid in Capital in excess of Par - Common (May 5, 2019)	-		(12,600)
	Paid in Capital in excess of Par - Preferred (Jan 12, 2018)	5,000		5,000
	Paid in Capital in excess of Par - Preferred (Mar 3, 2019)	-		45,000
	Total Paid in Capital		775,000		1,548,400
	Retained Earnings
	Revenue	150,000		210,000
	Operating Expenses	(88,000)		(98,000)
	Dividend paid 15 Feb 2019 - Preferred (Since record date is in FY 2019, hence transaction is recorded in 2019)	-		(2,500)
	Dividend declared on 31 Dec 2019 - Preferred	-		(40,000)
	Dividend declared on 31 Dec 2019 - Common	-		(17,550)
	Total Retained Earnings		62,000		51,950
	Total Stockholder's equity		837,000		1,600,350