Question

--- Bron Community College Preferred Stock (14,000 shares issued) $700,000 Common Stock (240,000 shares issued) 2,400,000 Pidin Capital in Bress of Par-Preferred Stock 240,000 Pild-in Capital incess of Par-Common Stock 380,000 Common Stock Dividends Distributable 240,000 Retained Earnings 966,500 A review of the accounting records reveals the following 1. No errors have been made in recording 2020 transactions or in preparing the closing entry for net income Preferred to $50 per on, and Cumulative; 14,000 shares have been outstanding since January 1, 2019 1 Authored stock is 19,000 shares of preferred, 480,000 shares of common with a $10 par value The laruary 1 balance in Retained Earnings was $1,100,000 5. On July 1, 18,000 shares of common stock were issued for cash at $16 per share. On September 1, the company discovered an understatement error of $85,000 in computing salaries and wages expense in 2019. The net of tax effect of $59.500 was properly debited directly to Retained Earnings A cash dividend of $240,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2019 On December 31, 10% common stock dividend was declared out of retained emings on common stock when the market price per share was $16. Net income for the year was $550,000 10. On December 31, 2020, the directors authorized disclosure of a $190,000 restriction of retained earnings for plant expansion (Use Notex.) Your answer is correct. Reproduce the retained Earnings account for 2020. (List items in order presented in the problem Retained Earnings Set 1 Prior Per Ady 59500f Jan. 1 Balance Dec 31 Cash Dividends 240000 || Dec. 31 Net Income Sock Dividends 38-4000

Answer 1

		Partial balance sheet
					$	$
Stockholder's equity:
Paid-in capital
Capital stock
6% preferred stock,$ 50 par value,cumulative,
19000 shares authorized,14000 shares issued and
outstanding						700000
Common stock,$ 10 par value,480000 shares authorized,
240000 shares issued and outstanding					2400000
Common stock dividend distributable					240000	2640000
Total capital stock				a		3340000
Paid-in capital in excess of par value-Preferred stock					240000
Paid-in capital in excess of par value-Common stock					380000
Total additional paid-in capital				b		620000
Total paid-in capital				c=a+b		3960000
Retained earnings		(See Note X)		d		966500
Total stockholder's equity				e=c+d		4926500
Note:X
Retained earnings restricted for plant expansion, $ 190000