Question

The post-closing trial balance of Ivanhoe Corporation at December 31, 2020, contains the stockholders' equity accounts. poration at December 31, 2020, contains the following Preferred Stock (15,000 shares issued) Common Stock (243,000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock Common Stock Dividends Distributable Retained Earnings $750,000 2,430,000 243,000 409,000 243,000 982,560 A review of the accounting records reveals the following. No errors have been made in recording 2020 transactions r in preparing the closing entry for net income. Preferred stock is $50 par, 6%, and cumulative: 15.000 shares have been outstanding since January 1, 2019. Authorized stock is 20,000 shares of preferred, 486,000 shares of common with a $10 par value. The January 1 balance in Retained Earnings was $1,150,000. On July 1, 18,800 shares of common stock were issued for cash at $18 per share. On September 1, the company discovered an understatement error of $87,200 in computing salaries and wages expense in 2019. The net of tax effect of $61,040 was properly debited directly to Retained Earnings. A cash dividend of $243,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2019. On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $18. Net income for the year was $574,000. On December 31, 2020, the directors authorized disclosure of a $204,000 restriction of retained earnings for plant expansion. (Use Note X.) 8. 9. 10. Reproduce the Retained Earnings account for 2020. (List items in order presented in the problem.) Retained Earnings SeptFlor 21.010 Jan I Bal 1,150,000 Ocivicesta 243,000 Def 31 Nel. 574,000 Decej Stock 109,00 Dec 31 Bal 982560 CO 243,600 X 100 X18= Prepare a stockholders' equity section at December 31, 2020. (Enter account name only and do

Answer 1

Retained Earnings
Sep. 1 Prior period adj.	61040	Jan. 1 Bal.	1150000
Oct. 31 Cash dividends	243000	Dec. 31 Net income	574000
Dec. 31 Stock dividend	437400
		Dec. 31 Bal.	982560

IVANHOE CORPORATION
Partial Balance Sheet
December 31, 2020
Stockholders' Equity
Paid-in capital
Capital stock
6% Preferred stock		750000
Common stock	2430000
Common stock dividends distributable	243000
		2673000
Total capital stock		3423000
Additional paid-in capital
Preferred stock	243000
Common stock	409000
Total additional paid-in capital		652000
Total paid-in capital		4075000
Retained earnings		982560
Total stockholders' equity		5057560

Allocation of the cash dividend to preferred stock $90000

Allocation of the cash dividend to common stock $153000

Working:

Preferred dividend in arrears = $50 x 6% x 15000 = $45000

Current year preferred dividend = $50 x 6% x 15000 = $45000

Total preferred dividend = $90000

Common dividend = $243000 - $90000 = $153000