Answer | |||
1.Journal entries for 2018 transactions: | |||
Date | Account Titles and Explanation | Debit | Credit |
Jan-02 | Cash (210,000 x $25) | $ 52,50,000 | |
Preferred stock | $ 52,50,000 | ||
Feb-08 | Land | $ 2,10,000 | |
Common stock | $ 2,10,000 | ||
Mar-05 | Dividends | $ 52,500 | |
Dividends payable-Preferred (210,000 x $1 x 1/4) | $ 52,500 | ||
Apr-02 | Dividends payable-Preferred | $ 52,500 | |
Cash | $ 52,500 | ||
Apr-18 | Cash | $ 3,90,000 | |
Common stock | $ 3,90,000 | ||
Jun-05 | Dividends | $ 52,500 | |
Dividends payable-Preferred (210,000 x $1 x 1/4) | $ 52,500 | ||
Jul-01 | Dividends payable-Preferred | $ 52,500 | |
Cash | $ 52,500 | ||
Sep-05 | Dividends | $ 52,500 | |
Dividends payable-Preferred (210,000 x $1 x 1/4) | $ 52,500 | ||
Oct-01 | Dividends payable-Preferred | $ 52,500 | |
Cash | $ 52,500 | ||
Oct-04 | Cash | $ 9,00,000 | |
Preferred stock (36,000 x $25) | $ 9,00,000 | ||
Dec-05 | Dividends | $ 61,500 | |
Dividends payable-Preferred (246,000 x $1 x 1/4) | $ 61,500 | ||
Dec-14 | Dividends | $ 20,65,000 | |
Dividends payable-Common (4130,000 x $0.50) | $ 20,65,000 |
Closing entries: | |||
Date | Account Titles and Explanation | Debit | Credit |
Dec-31 | Income Summary | $1,100,000 | |
Retained earnings | $1,100,000 | ||
[To record net income/(loss) | |||
Dec-31 | Retained Earnings | 2275000 | |
Dividends (52500+52500+52500+52500+61500+2065000) | 2275000 | ||
(To close dividends) | |||
Note: No Entry for dividend record on Mar 20, June 20, Sept 20, Jan 1 and Jan 10 |
Calculations: | |
(i) Common Shares as of Dec 14: | |
Shares | |
Beginning | 28,60,000 |
Land | 1,00,000 |
Issued | 3,90,000 |
Total | 33,50,000 |
(ii) Preferred shares: | |
Shares | |
Issued on Jan 2 | 2,10,000 |
Issued on Oct 4 | 36,000 |
Total | 2,46,000 |
2. T-Accounts: | |||
Preferred Shares | |||
Jan 1 Beginning | |||
$ 37,257 | $ 52,50,000 | ||
Dec 31 Ending | $ 61,50,000 | $ 38,261 | $ 9,00,000 |
$ 61,50,000 | $ 61,50,000 | ||
Common Shares | |||
Jan 1 Beginning | $ 28,60,000 | ||
$ 39,479 | $ 2,10,000 | ||
Dec 31 Ending | $ 34,60,000 | $ 43,191 | $ 3,90,000 |
$ 34,60,000 | $ 34,60,000 | ||
Retained Earnings | |||
Dec 31 Dividends | $ 22,75,000 | Jan 1 Beginning | $ 34,70,000 |
Dec 31 Ending | $ 22,95,000 | Dec 31 Net income | $ 11,00,000 |
$5,210,000 | $ 45,70,000 | ||
Dividends Declared | |||
Apr-02 | 52500 | Mar-05 | 52500 |
Jul-01 | 52500 | Jun-05 | 52500 |
Oct-01 | 52500 | Sep-05 | 52500 |
Dec-05 | 61500 | ||
Dec 31 Ending | 2126500 | Dec-14 | 2065000 |
2284000 | 2284000 |
3. Statement of Retained Earnings: | |
CATO LTD. | |
Statement of Retained Earnings | |
For the Year Ended December 31,2018 | |
Balance as on Jan 1,2018 | 3470000 |
Add: Net income | 11,00,000 |
45,70,000 | |
Less: Dividends | 2275000 |
Balance as on Dec 31,2018 | 22,95,000 |
4. Statement of Financial Position (Partial): | |
CATO LTD. | |
Statement of Financial Position (Partial) | |
For the Year Ended December 31,2018 | |
Stockholder's Equity: | |
Paid-in capital | |
Common Stock | 3460000 |
Preferred Stock | 6150000 |
Total paid-in capital | 9610000 |
Retained Earnings | 22,95,000 |
Total Stockholder's Equity | 1,19,05,000 |
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