Question

Project 3: Stockholders' Equity (10 points) Required: Answer the questions on the following page in this booklet and turn in the entire booklet at the beginning of class on the date specified by your instructor Shown below is the stockholders' equity section of Tiny Tot's stockholders' equity section of the balance sheet at December 31, 2020: Common stock, $1 par value, 5,000,000 shares authorized, 670,000 shares issued and outstanding Additional paid-in capital Retained earnings Total stockholders' equity $670,000 1,420,000 2.900,000 $ 4,990,000 During 2021, the following events occurred: > Tiny Tot's was authorized to sell 100,000 shares of $100 par, 8% preferred stock Tiny Tot's sold 15,000 shares of the preferred stock at its par value A cash dividend of $300,000 was declared and paid Tiny Tot's declared and issued a 10% stock dividend on the common stock when the market value of the stock was $14 per share > Net income for the year was $1,490,000 670,000/670,ooo 10%) 670000+67,000 = 737,000 300,000 -

Answer 1

Capital stock, as of December 31, 2021:
Number of common shares authorized	5,000,000.00	Shares
Number of common shares issued and outstanding 670,000 shares x 1.10	737,000.00	shares
Number of  Preferred shares issued and outstanding	15,000.00	shares
Amount of cash dividend to common stockholders
Cash Dividend	$    300,000.00
Less: Preferred Dividend (15000 x $100 x 8%)	$    120,000.00
Amount of cash dividend to common stockholders	$    180,000.00
Amount of cash dividend to preferred stockholders (15000 x $100 x 8%)	$    120,000.00
Total debit to Stock Dividends account  - Retained earnings debited (670000 x 10% x $14)	$    938,000.00
Additional paid-in capital, at December 31, 2021  (670000 x 10% x ($14 - $1)	$    871,000.00
Retained earnings, at January 1, 2021	$ 2,900,000.00
Retained earnings, at December 31, 2021 ($2900000 + 1490000 -$300,000 - 938000	$ 3,152,000.00
Total Stockholders' Equity, at December 31, 2021
Common stock, $1 par value, 5,000,000 shares authorized, 737,000 shares issued and outstanding	737,000.00
8% Preferred stock, $100 par value, 100,000 shares authorized, 15,000 shares issued and outstanding	1,500,000.00
Additional paid-in capital	$ 2,291,000.00
Retained earnings	$ 3,152,000.00
Total Stockholders' equity	7,680,000.00