Business, 20.06.2020 22:57, baabyylewis
Maria Martinez organized Manhattan Transport Company in January 2015. The corporation immediately issued at $8 per share one-half of its 200,000 authorized shares of $2 par value common stock. On January 2, 2016, the corporation sold at par value the entire 5,000 authorized shares of 8 percent, $100 par value cumulative preferred stock. On January 2, 2017, the company again needed capital and issued 5,000 shares of an authorized 10,000 shares of no-par cumulative preferred stock for a total of $512,000. The no-par shares have a stated dividend of $9 per share.
The company declared no dividends in 2015 and 2016. At the end of 2016, its retained earnings were $170,000. During 2017 and 2018 combined, the company earned a total of $890,000. Dividends of 50 cents per share in 2017 and $1.60 per share in 2018 were paid on the common stock.
Instructions
a. Prepare the stockholders’ equity section of the balance sheet at December 31, 2018. Include a supporting schedule showing your computation of retained earnings at the balance sheet date.
(Hint: Income increases retained earnings, whereas dividends decrease retained earnings.)
b. Assume that on January 2, 2016, the corporation could have borrowed $500,000 at 8 percent interest on a long-term basis instead of issuing the 5,000 shares of the $100 par value cumulative preferred stock. Identify two reasons a corporation may choose to issue cumulative preferred stock rather than finance operations with long-term debt
Answers: 2
Business, 22.06.2019 01:00, jonzyjones3114
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Business, 22.06.2019 16:00, bossboybaker
Analyzing and computing accrued warranty liability and expense waymire company sells a motor that carries a 60-day unconditional warranty against product failure. from prior years' experience, waymire estimates that 2% of units sold each period will require repair at an average cost of $100 per unit. during the current period, waymire sold 69,000 units and repaired 1,000 units. (a) how much warranty expense must waymire report in its current period income statement? (b) what warranty liability related to current period sales will waymire report on its current period-end balance sheet? (hint: remember that some units were repaired in the current period.) (c) what analysis issues must we consider with respect to reported warranty liabilities?
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Maria Martinez organized Manhattan Transport Company in January 2015. The corporation immediately is...
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