Question

CALCULATOR PRINTER VERSION Problem 14-02A - (Part Level Submission) The post-closing trial balance of Sheridan Corporation at December 31, 2020, contains the following stockholdere guy arous Preferred Stock (16,000 shares issued) $800,000 Common Stock (259,000 shares issued) 2,590,000 Paid-in Capital in Excess of Par-Preferred Stock 259,000 Pald-in Capital in Excess of Par-Common Stock 410,000 Common Stock Dividends Distributable 259,000 Retained Earnings 921,900 A review of the accounting records reveals the following 4. 5. 6. No errors have been made in recording 2020 transactions or in preparing the closing entry for net income Preferred stock is $50 par, 6%, and cumulative; 16,000 shares have been outstanding since January 1, 2019 Authorized stock is 21,000 shares of preferred, 518,000 shares of common with a $10 par value The January 1 balance in Retained Earnings was $1,120,000 On July 1, 21,600 shares of common stock were issued for cash at $10 per share. On September 1, the company discovered an understatement error of $87,000 in computing salaries and wages expense in 2019. That of tax effect of $10,000 was property debe directly to e A cash dividend of $259,000 was declared and properly located to preferred and common stock on October 1, No divino ir po to preferred in 2019 On December 31, a 10% common stock dividend was declared out of retained earnings on common rock when the market price per Net income for the year was $588,000. On December 31, 2020, the directors authorized disclosure of a $100,000 restriction of retained caring for a rning 8. 9. 10. Reproduce the Retained Earnings account for 2020. (List items in order presented in the problem.) Retained Earnings

Answer 1

(a)				Retained earnings
				Debit				Credit
	Prior period adjustment			60900	Beg.Balance			1120000
	Cash dividend			259000	Net income			588000
	Stock dividend		(Note:1)	466200
	End.Balance			921900
	Total			1708000	Total			1708000
	Note:1
	Stock dividend=Number of common stock issued*Market price per share
	Number of common stock issued=Common stock outstanding*10%=259000*10%=25900 shares
	Stock dividend=25900*18=$ 466200
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