Reference no: EM133130635

Question - Cobalt Industries started operations in 2019 with unlimited authorized shares for common and 10,000 authorized shares for preferred. In 2019, 15,000 common shares were issued for cash of $13 per share. The company also issued 1,200, $4.00 preferred shares for cash of $10 per share. Preferred shares are cumulative.

The following table reports the revenues the company was able to generate, expenses incurred and dividends paid each year. The company has a December 31st year end.

Year Revenues Expenses Dividends Paid

2019 $240,000 $245,000 $0

2020 $295,000 $210,000 $3,500

2021 $350,000 $270,000 $15,000

Required -

1. Calculate the ending balance of Retained Earnings for each year of operations.

2. Prepare the shareholder's equity section for 2021 for the company. Journal entries are not required.

3. Calculate the dividends owed and paid to common and preferred shareholders for each year.