Question

8Blam 14-02A a-c (Part Level Submission) PRINTER VERSION BACK NEXT The post-closing trial balance of Sheridan Corporation at December 31, 2020, contains the felowing stocknelders equity acunts Preferred Stock (16,000 shares issued) Common Stock (259,000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock Paid-in Captal in Excess of Par-Common Stock $800,000 2,590,000 259,000 410,000- Common Stock Dividends Distributable 259,000 Retained Eamings 921,900 A review of the accounting records reveals the following No errors have been made in recording 2020 transctions or in preparing the closing entry for net income 1. Preferred stock is $50 par, 6% , and cumulative; 16,000 shares have been outstanding since January 1, 2019 Authorized stock is 21,000 shares of preferred, 518,000 shares of common with a $10 par value The January 1 balance in Retained Earnings was $1,120,000. 2. 3. 4. On July 1, 21,600 shares of common stock were issued for cash at $18 per share. On September 1, the company discovered an understatement error of $87,000 in computing salaries and wages expense in 2019 The net of tax effect of $60,900 was properly debited directy to Retained Earnings A cash dividend of $259,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to prefered stockholders in 2019. On December 31, a 10% common stock dividend was declared out of retained earnings on common stock whene market price per share was $18 6. 7. 8. 9 Net Income for the year was $588,000. On December 31, 2020, the directors authorized disclosure of a $193,000 restriction of retained earnings for plant expansion (Use Note X) 10. (a) Your answer is correct Reproduce the Retained Eanings account for 2020. (List items in order presented in the problem.) Retained Eamings 1.120,000 60,900 Sept. 1 Prior Per Adj Jan. 1 Balance 588,000 259,000 Dec. 31 Net Income Dec. 31 Cash Dividends 466200 ctock neidennst

Answer 1

a) The Retained Earnings Account is shown as follows:- (Amounts in $)

Retained Earnings
Sep 1 Prior Period Adj	60,900	Jan. 1 Balance	1,120,000
Dec 31 Cash Dividends	259,000	Dec. 31 Net Income	588,000
Dec 31 Stock Dividends (259,000 shares*10%*$18)	466,200
		Dec 31 Balance	921,900

b) Stockholder's Equity section at Dec 31, 2020 is shown as follows:- (Amounts in $)

SHERIDAN CORPORATION
Partial Balance Sheet
At December 31, 2020
Paid-in Capital
Capital Stock
Preferred Stock		800,000
Common Stock	2,590,000,
Common Stock Dividend Distributable	259,000
		2,849,000
Total Capital Stock		3,649,000
Additional Paid-in Capital
In Excess of Par Value-Preferred	259,000
In Excess of Par Value-Common	410,000
Total Additional Paid-in Capital		669,000
Total Paid-in Capital (A)		4,318,000
Retained Earnings (B)		921,900
Total Stockholder's Equity (A+B)		5,239,900
Note X: Retained earnings is restricted for plant expansion, $193,000

Therefore total stockholder's equity to be reported on Balance Sheet is $5,239,900.