Reference no: EM132908385
Question - P & C Company are authorized to issue 330,000, 12% preferred stocks (par value $10 each) and 1,000,000 common stocks (par value $5 each).
Company issued 25,000 preferred stocks at par on Jan 17, 2020.
Company issued 350,000 common stocks at par on Apr 11, 2020.
Company issued 125,000 preferred stocks at $12 each on Aug 22, 2020.
Company issued 80,000 preferred stocks at par on Sep 01, 2020.
Company issued 300,000 common stocks at $20 each on Oct 01, 2020.
At the end of Dec. 31, 2020, company earned Gross Profit of $6,300,000 which is 25% of total revenue.
Operating Expense includes salaries and admin expense of $50,000, Advertising Expense of $100,000 and other miscellaneous operating expenses of the year are 5% of total revenue.
Interest was paid @ 8% of Notes Payable $750,000 and Mortgage Payable $800,000 and 6% on long term loan of 2,500,000.
Company reacquired its 150,000 shares at par.
Interim Dividend declared: $0.25 per share on common stocks and 50% of the preferred stocks were paid.
Final Dividend declared: $2 per share on common stocks Ø Retained Earnings balance (Dec. 31, 2019) was $850,000.
Required -
1. Prepare a Retained Earnings Statement for the year ended Dec. 31, 2020.
2. Prepare a Shareholders' Equity Statement for the year ended Dec. 31, 2020.
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