As of december 31 20x4 trask had 4000000 authorized shares

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Reference no: EM13580812

Task Corporation had the following stockholders' equity account balances at December 31, 20x4:

Common Stock $ 7,875,000

Paid-in Capital in Excess of Par 15,750,000

Paid-in Capital Employee Stock Options 400,000

Retained Earnings 16,445,000

Treasury Stock 750,000

Transactions and other information related to stockholders' equity accounts were as follows:

As of December 31, 20x4, Trask had 4,000,000 authorized shares of $5 par value common stock - 1,575,000 shares had been issued, of this 75,000 were held in the treasury. The treasury shares were accounted for using the cost method.
On January 1, 20x5, Trask issued 5,000 shares of $100 par value, 6% cumulative preferred stock at par in exchange for legal fees valued at $522,000.
On March 1, 20x5, Task formally retired 25,000 of the treasury shares. The shares were originally issued for $15 per share and had been reacquired on September 25, 2004 for $10 per share.
Trask owned shares of Harbor, Inc. common stock that was purchased during 20x4 for $600,000. On March 5, 20x5, Trask declared a property dividend to distribute all of the Harbor shares to common stockholders of record on April 16, 20x5. The market value of the Harbor stock on March 5, 20x5 was $764,000. The property dividend was distributed on April 29, 20x5.
On January 2, 20x3, Trask granted stock options to employees to purchase 200,000 shares of the company's common stock at $12 per share, which was the market price on that date. The market price of the options on the grant date was $2 per option.The options are exercisable within a three year period, beginning January 1, 20x5. On July 1, 20x5, employees exercised 150,000 options when the market value of the stock was $25 per share.
On October 27, 20x5, Trask declared a two-for-one stock split on its common stock and reduced the per share par value accordingly. Trask stockholders of record received one additional share for each share owned.
On December 12, 20x5, Trask declared the yearly cash dividend on preferred stock, payable on January 11, 20x6.
On January 16, 20x6 before the accounting records are closed for 20x5, Trask became aware of the fact that depreciation was understated by $350,000 for the year ended December 31, 20x4. The after tax effect on net income was $245,000.
Net income for 20x5 was $2,400,000.
The average price of a share of Trask common stock was $22 per share.
The price of a share of Trask common stock was $24 at year end.

Required:

Prepare all journal entries required to record the above information during 20x5.
Prepare Trask's statement of retained earnings for the year ended December 31, 20x5.
Prepare the stockholders' equity section of Trask's balance sheet at December 31, 20x5.
Compute earnings per share for the year 20x5.

Reference no: EM13580812

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