Question

Statement of stockholders' equity Noric Cruises Inc. began the month of October with the following balances: Common Stock, $140,000; Additional Paid-In Capital, $3,000,000; and Retained Earnings, $12,600,000. During June, Noric issued for cash 60,000 shares of common stock (with a stated value of $1) at $13 per share. Noric reported the following results for the month ended October 31: Net income $2,300,000 Cash dividends declared 455,000 Prepare a statement of stockholders' equity for the month ended October 31. If there is a net loss or there has been a decrease in stockholders' equity, enter that amount as a negative number using a minus sign. If an amount box does not require an entry, leave it blank. Noric Cruises Inc. Statement of Stockholders' Equity For the Month Ended October 31 Additional Paid-In Common Retained Earnings Stock Capital Total Balances, October 1 Issued Common Stock llll Net Income Dividends Balances, October 31

Answer 1

1.

	Common Stock	Additional Paid in Capital	Retained earnings	Total
Balances, October 1	140,000	3,000,000	12,600,000	15,740,000
Issued common stock	60000	720000		780000
Net Income			2,300,000	2,300,000
Dividends			-455000	-455000
Balances, October 31	200,000	3,720,000	14,445,000	18,365,000

2.

	1st year	2nd year	3rd year	4th year
Dividend per share (preferred stock)	0.4	0.8	0.6	0.6
Dividend per share (common stock)	0	0.03	0.10	0.13

Workings:

	1st year	2nd year	3rd year	4th year
Total dividends	32,000	75,000	90,000	100,000
Preferred dividends	32000	64000	48000	48000
Common stock dividends	0	11,000	42,000	52,000
No of shares (preferred stock)	80000	80000	80000	80000
Dividend per share (preferred stock)	0.4	0.8	0.6	0.6
No of shares (common stock)	405,000	405,000	405,000	405,000
Dividend per share (common stock)	0	0.03	0.10	0.13

Preferred dividend = 80,000 * 20* 3%= 48,000

Year 2nd = 48,000 +( 48,000 - 36,000) = 64,000