Question

The post-closing trial balance of Sunland Corporation at December 31, 2020, contains the following stockholders equity accounts Preferred Stock (14.600 shares issued Common Stock (242.000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock Common Stock Dividends atributable Retained ning 5730000 2420.000 242.000 383000 242 000 909.770 Areview of the accounting records reveals the 1 No errors have been made in recording 2020 transactions or in preparing the closing entry for net income 2. Preferred stock 550 par, 6% and cumulative: 14.600 shares have been outstanding since January 1, 2019 3 Authorized stock is 19.600 shares of preferred. 434000 shares of common with a $10 par value 4 The January 1 balance in Retained Earnings was $1.100.000 5. On July 1, 21.900 shares of common stock were issued for cash at $10 per share 6 on September 1, the company discovered an understatement error of 590.900 in computing salaries and wages expense in 2016. The net of tax effect of $63630 was properly debited directly to Retained Earnings 7. Acash dividend of $242000 was declared and properly allocated to preferred and common stock on October 1 No dividends were paid to preferred stockholders in 2019. 8 On December 31, a 10x common stock dividend was declared out of retained earnings on common stock when the market pricepershare wis $18. 9. Net income for the yew was $551.000. 10 On December 31, 2020, the directors authorized disclosure of a $201.000 restriction of retained earnings for plant pasion. (Use Notex Reproduce the Retained Earnings account for 2020. List items in order presented in the problem Retained Earnings

Answer 1

Solution 1:

Retained Earnings Account
Correction of understatement error	63630	Beg. balance	1100000
Cash dividend	242000	Net income	551000
stock dividend (242000*10%*$18)	435600
		Ending balance	909770

Solution 2:

Storey Corporation
Partial Balance Sheet
December 31, 2020
Stockholders' Equity:
Paid in Capital:
Capital Stock:
Preferred Stock		$7,30,000
Common Stock	$24,20,000
Common Stock Dividend distributable	$2,42,000
		$26,62,000
Total capital Stock		$33,92,000
Additional Paid in Capital:
Paid in Capital in excess of Par -Preferred Stock	$2,42,000
Paid in Capital in excess of Par -Common Stock	$3,83,000
Total Additional paid in Capital		$6,25,000
Total paid in Capital		$40,17,000
Retained earnings		$9,09,770
Total Stockholders' Equity		$49,26,770

Solution 3:

Allocation of cash dividend to Preferred stock = Current year dividend + Dividend in arrears

= (14600*$50*6%) * 2 = $87,600

Allocation of cash dividend to Common stock = Total Cash dividend - Preferred Dividends

= $242000 - $87600 = $154,400