Question

Required information Problem 8-23 Recording and reporting stock transactions and cash dividends across two accounting cycles LO 8-3, 8-4, 8-5, 8-6 [The following information applies to the questions displayed below.] Sun Corporation received a charter that authorized the issuance of 105,000 shares of $7 par common stock and 22,000 shares of $125 par, 5 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation: 2018 Jan. 5 Sold 15,750 shares of the $7 par common stock for $9 per share. 12 Sold 2,200 shares of the 5 percent preferred stock for $135 per share. Apr. 5 Sold 21,000 shares of the $7 par common stock for $11 per share. Dec. 31 During the year, earned $306,700 in cash revenue and paid $237,500 for cash operating expenses. 31 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. 3 Sold 3,300 shares of the $125 par preferred stock for $145 per share. May. 5 Purchased 550 shares of the common stock as treasury stock at $14 per share. Dec. 31 During the year, earned $254,400 in cash revenues and paid $177,900 for cash operating expenses. 31 Declared the annual dividend on the preferred stock and a $0.50 per share dividend on the common stock.

Problem 8-23 Part a Required Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. Indicating to provide separate effect on accounting equation for Revenue, Operating expense, and "NA" for no effect.)

Part b Prepare the stockholders’ equity section of the balance sheet at December 31, 2018.

Answer 1

a.

	Assets	=	Liabilities	+	Stockholder's Equity
	Cash		Dividend Payable	+	Common Stock	+	Preferred Stock	+	Paid in capital in excess of par-common stock	+	Paid in capital in excess of par-preferred stock	+	Retained Earnings	-	Treasury Stock
2018
Jan-05	$                 1,41,750				$      1,10,250				$            31,500
Jan-12	$                 2,97,000						$     2,75,000				$                22,000
Apr-05	$                 2,31,000				$      1,47,000				$            84,000
Dec-31	$                     69,200												$      69,200
Dec-31			$          13,750										$    -13,750
Balance	$                 7,38,950		$          13,750		$      2,57,250		$     2,75,000		$         1,15,500		$                22,000		$      55,450		$          -
2019
Feb-15	$                   -13,750		$        -13,750
Mar-03	$                 4,78,500						$     4,12,500				$                66,000
May-05	$                     -7,700														$    7,700
Dec-31	$                     76,500												$      76,500
Dec-31			$          52,475										$    -52,475
Balance	$               12,72,500		$          52,475		$      2,57,250		$     6,87,500		$         1,15,500		$                88,000		$      79,475		$    7,700

2018 Dividend = 275000*5%
2019 Dividend = (687500*5%+(15750+21000-550)*0.5)

Stockholders Equity
Common Stock	$                          2,57,250
Preferred Stock	$                          2,75,000
Paid in capital in excess of par-common stock	$                          1,15,500
Paid in capital in excess of par-preferred stock	$                             22,000
Retained Earnings	$                             55,450
Total Stockholders Equity	$                         7,25,200