Question

The balance sheet of Florida Cruises, Inc., included the following shareholders’ equity accounts at December 31, 2020:

Paid-in capital:
Preferred stock, 8.0%, 83,000 shares at $1 par $ 83,000
Common stock, 333,300 shares at $1 par 333,300
Paid-in capital—excess of par, preferred 1,455,000
Paid-in capital—excess of par, common 2,505,000
Retained earnings 8,345,000
Treasury stock, at cost; 3,300 common shares (36,300 )
Total shareholders' equity $ 12,685,000

During 2021, several events and transactions affected the retained earnings of Florida.

On March 3, the board of directors declared a property dividend of 215,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $632,000). The investment shares had a fair value of $3 per share and were distributed March 31 to shareholders of record March 15.

On May 3, a 3-for-2 stock split was declared and distributed. The stock split was effected in the form of a 50% stock dividend. The market value of the $1 par common stock was $11 per share.

On December 1, the board of directors declared the 8.0% cash dividend on the 83,000 preferred shares, payable on December 28 to shareholders of record December 20. Net income for the year was $730,000. Florida reduces paid-in capital rather than retained earnings in recording large stock dividends.

Net income for the year was $730,000. Florida reduces paid-in capital rather than retained earnings in recording large stock dividends.

As of December 31, 2021, how many shares of common stock are issued?

What is the ending balance of Retained Earnings on the balance sheet dated December 31, 2021?

Answer 1

Date	Account Titles	Debit	Credit
		$	$
Mar 3	Investment in Leasco International	13,000
	Gain on Investments		13,000
Mar 3	Retained Earnings	645,000
	Property Dividend Payable		645,000
Mar 15	No journal entry required	0	0
Mar 31	Property Dividend Payable	645,000
	Investment in Leaseco International		645,000
May 3	Paid-in Capital in Excess of Par	165,000
	Common Stock		165,000
Dec 1	Retained Earnings	6,640
	Dividends Payable: Preferred Stock		6,640
Dec 31	Income Summary	730,000
	Retained Earnings		730,000

No. of shares in common stock issued as of December 31, 2021 = ( 330,000 / 2 * 3 ) + 3,300 = 498,300

Ending balance of Retained Earnings as of December 31, 2021 = $ 8,423,360