Reference no: EM13590240

Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December 31, 2013, is shown below. 5% preferred stock, $100 par value, 10,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $5 par value, 200,000 shares authorized; 60,000 shares issued and outstanding 300,000 Paid-in capital in excess of par value preferred stock 40,000 Paid-in capital in excess of par value common stock 300,000 Retained earnings 656,000 Total stockholders' equity $1,796,000 The following transactions, among others, occurred during 2014:Apr. 1 Declared and issued a 100% stock dividend on all outstanding shares of common stock. The market value of the stock was $11 per share. Dec. 7 Declared and issued a 4% stock dividend on all outstanding shares of common stock. The market value of the stock was $14 per share. Dec. 20 Declared and paid (1) the annual cash dividend on the preferred stock and (2) a cash dividend of 80 cents per common share.

(a) Use the financial statement effects template to indicate the effects of these separate transactions. Balance Sheet Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Apr. 1 Dec. 7 Dec. 20 Income Statement Revenue - Expenses = Net Income Answer?

(b) Compute retained earnings for 2014 assuming that the company reports 2014 net income of $262,000.