Question

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

Answer 1

Here are the following information:

		working
Capital stock as of Dec 31 2021
#of common shares authorized	5,000,000	stated in question
#of common shares issued and outstanding	737,000	common stock + stock dividend= 670000+(670000*0.10)
#of preferred shares issued and outstanding	15000	stated in question
Amount of cash dividend to common stockholders	180,000	cash dividend - preference dividend = 300000 - 120000
Amount of cash dividend to preferred stockholders	120,000	15000 *100*8%
Total debit to stock dividend	938000	670000*10%*14
Additional capital 31 dec 2021	2,291,000	1,420,000 + [(670000*0.10)*(14-1)]
Retained earnings at Jan 1,2021	2,900,000	stated in question
Retained earnings at Dec 31,2021	3,152,000	beg bal + net income - cash and stock dividend =2,900,000 + 1,490,000 -300000 - 938000
Total stockholder's equity at Dec 31,2021	7,680,000	[737000+1,500,000+2,291,000+3,152,000]