Reference no: EM133116809

Question 1 - On January 1, 2022, Cullumber Corporation had the following stockholders' equity accounts.

Common Stock ($26 par value, 58,500 shares issued and outstanding) $1,521,000

Paid-in Capital in Excess of Par-Common Stock 192,000

Retained Earnings 622,000

During the year, the following transactions occurred.

Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.

Mar. 1 Paid the dividend declared in February.

Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $38.

July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $14 per share.

July 31 Issued the shares for the stock dividend.

Dec. 1 Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2023.

Dec. 31 Determined that net income for the year was $359,000.

Required -

a. Journalize the transactions and the closing entries for net income and dividends.

b. Enter the beginning balances, and post the entries to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.)

c. Prepare a stockholders' equity section at December 31.

Question 2 - In 2022, Sheridan Corporation had net sales of $602,000 and cost of goods sold of $356,000. Operating expenses were $149,000, and interest expense was $6,500. The corporation's tax rate is 20%. The corporation declared preferred dividends of $12,000 in 2022, and its average common stockholders' equity during the year was $159,000.

Required -

a. Prepare an income statement for Sheridan Corporation.

b. Compute Sheridan Corporation's return on common stockholders' equity for 2022.