Question

Sun Corporation received a charter that authorized the issuance of 116,000 shares of $5 par common stock and 21,000 shares of $100 par, 5 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation:

2018

Jan.	5		Sold 17,400 shares of the $5 par common stock for $7 per share.
	12		Sold 2,100 shares of the 5 percent preferred stock for $110 per share.
Apr.	5		Sold 23,200 shares of the $5 par common stock for $9 per share.
Dec.	31		During the year, earned $318,300 in cash revenue and paid $241,000 for cash operating expenses.
	31		Declared the cash dividend on the outstanding shares of preferred stock for 2018. The dividend will be paid on February 15 to stockholders of record on January 10, 2019.

2019

Feb.	15		Paid the cash dividend declared on December 31, 2018.
Mar.	3		Sold 3,150 shares of the $100 par preferred stock for $120 per share.
May.	5		Purchased 550 shares of the common stock as treasury stock at $10 per share.
Dec.	31		During the year, earned $254,400 in cash revenues and paid $173,300 for cash operating expenses.
	31		Declared the annual dividend on the preferred stock and a $0.50 per share dividend on the common stock.

Required a. Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. Indicating to provide separate effect on accounting equation for Revenue, Operating expense, and "NA" for no effect.) Sun Corporation Accounting Equation Stockholders' Equity Event Assest = Liabilities Cash Dividends . Preferred. Common Payable Stock Stock Paid-in Capital in + Excess of Preferred Stock Paid-in Capital in + Excess of - Common Stock Treasury Stock Retained Earnings Accounts Titles for Retained Earnings . 2.018 2018 Jan.5 Jan. 12 Apr.5 Dec.31 Dec.31 Dec 31 Bal. . 2.018 2019 Feb. 15 Mar. 3 .. May 5 Dec 31 Dec 31 Dec 31 B.. Bal.

Answer 1

Retained + Earnings Account titles for Retained Earnings Sun Corporation 2018 Assets = Liabilties + Stockholders Equity Dividends Preferred Common Paid in Capital in Excess Paid in Capital in Excess Treasury Events Cash = Payable + Stock Stock of Par-Preferred Stock of Par-Common Stock - Stock 5-Jan 121,800 87,000 34,800 12-Jan 231,000 210,000 21,000 5-Apr 208,800 116,000 92,800 31-Dec 318,300 31-Dec (241,000) = 31-Dec 10,500 + Totals 638,900 = 10,500 + 210,000 203,000 21,000 127,600 - 318,300 Service Revenue + (241,000) Operating expenses (10,500) 66,800 (10,500) + + 315,000 63,000 (10,500) = 378,000 = (5,500) = 254,400 = (173,300) = 5,500 2019 15-Feb 3-Mar 5-May 31-Dec 31-Dec 31-Dec Totals + + + 254,400 Service Revenue (173,300) Operating expenses (46,275) Dividends 101,625 1,082,000 = 46,275 + 46,275 + 525,000 203,000 84,000 127,600 - 5,500 +

CALCULATIONS BELOW:

Debit Credit Calculation Sun Corporation Date Account Year 1 5-Jan Cash Common Stock Paid in Capital in Excess of Par-Common Stock 121,800 87,000 34,800 =17,400*7 =17,400*5 231,000 12-Jan Cash Preferred Stock Paid in Capital in Excess of Par-Preferred Stock =2,100*110 =2,100*100 210,000 21,000 208,800 5-Apr Cash Common Stock Paid in Capital in Excess of Par-Common Stock =23,200*9 =23,200*5 116,000 92,800 318,300 31-Dec Cash Service Revenue 318,300 241,000 31-Dec Operating expenses Cash 241,000 10,500 =210,000*5% 31-Dec Dividends Dividends Payable 10,500 318,300 31-Dec Service Revenue 12/31 cl. Retained Earnings 318,300 241,000 31-Dec Retained Earnings 12/31 cl. Operating expenses 241,000 10,500 31-Dec Retained Earnings 12/31 cl. Dividends 10,500 Year 2 15-Feb Dividends Payable Cash 10,500 10,500 378,000 3-Mar Cash Preferred Stock Paid in Capital in Excess of Par-Preferred Stock =3,150*120 =3,150*100 315,000 63,000 5,500 =550*10 5-May Treasury Stock-Common Cash 5,500 254,400 31-Dec Cash Service Revenue 254,400 173,300 31-Dec Operating expenses Cash 173,300 46,275 Workings below 31-Dec Dividends Dividends Payable 46,275 254,400 31-Dec Service Revenue 12/31 cl. Retained Earnings 254,400 173,300 31-Dec Retained Earnings 12/31 cl. Operating expenses 173,300 46,275 31-Dec Retained Earnings 12/31 cl. Dividends 46,275 Workings 12-Jan Preferred Stock issued 3-Mar Preferred Stock issued Total Preferred Stock @ Par Value Dividend % Preferred Dividends 210,000 315,000 525,000 5% 26,250 =525,000*5% 5-Jan Common Stock issued 5-Apr Common Stock issued 5-May Treasury Stock purchased Total Number of Common Shares Dividend per share Common Dividends Total Dividends 17,400 23,200 (550) 40,050 0.50 20,025 40,050*0.50 46,275 =26, 250+20,025

Stockholders Equity Preferred Stock Common Stock Paid in Capital in Excess of Par-Preferred Stock Paid in Capital in Excess of Par-Common Stock Total Paid in Capital Retained earnings Less Treasury Shares Total Stockholders Equity 2018 210,000 203,000 21,000 127,600 561,600 66,800 628,400

2019 Sun Corporation Balance Sheet As of December 31, 2019 Assets Current Assets Cash Total Assets 1,082,000 1,082,000 Liabilities & Stockholders Equity Current Liabilities Dividends Payable Total Current Liabilities 46,275 46,275 Stockholders Equity Preferred Stock Common Stock Paid in Capital in Excess of Par-Preferred Stock Paid in Capital in Excess of Par-Common Stock Total Paid in Capital Retained earnings Less Treasury Shares Total Stockholders Equity Total Liabilities & Stockholders Equity 525,000 203,000 84,000 127,600 939,600 101,625 (5,500) 1,035,725 1,082,000