The stockholders equity accounts of sigma corporation on

Reference no: EM13607641

The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows.

Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized)$ 300,000
Common Stock ($5 stated value, 300,000 shares authorized)1,000,000
Paid-in Capital in Excess of Par Value-Preferred Stock15,000
Paid-in Capital in Excess of Stated Value-Common Stock480,000
Retained Earnings688,000
Treasury Stock-Common (5,000 shares)40,000

During 2010 the corporation had the following transactions and events pertaining to its stockholders' equity.

Feb.1Issued 5,000 shares of common stock for $30,000.
Mar.20Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct.1Declared an 8% cash dividend on preferred stock, payable November 1.
Nov.1Paid the dividend declared on October 1.
Dec.1Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
31Determined that net income for the year was $280,000. Paid the dividend declared on December 1.

Hint: Journalize transactions, post, and prepare a stockholders' equity section; calculate ratios.

Instructions
(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)

(b) Enter the beginning balances in the accounts and post the journal entries to the stockholders' equity accounts. (Use T accounts.)

(d) Calculate the payout ratio, earnings per share, and return on common stockholders' equity ratio. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)

Reference no: EM13607641

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