Reference no: EM13763015

Problem 1: During 2012, Margan Corporation had the following transactions and events.

Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present your answer in tabular form with the following columns. Use (I) for increase, (D) for decrease, and (NE) for no effect. Item no. 1 is given as an example in the worksheet.

1. Declared a cash dividend.
2. Issued par value commons stock for cash at par value.
3. Completed a 2-for-1 stock split in which $10 par value stock was changed to $5 par value stock.
4. Declared a small stock dividend when the market value was higher than par value.
5. Made a prior period adjustment for overstatement of net income.
6. Issued the shares of common stock required by the stock dividend declaration in item no. 4 above.
7. Issued par value common stock for cash above par value.

Problem 2: Beck Company reported the following balances at December 31, 2012: common stock $400,000; paid-in capital in excel of par value - common stock $100,000; and retained earnings $250,000. During 2012, the following transactions affected stockholder's equity.

Prepare the stockholders' equity section of Beck Company's December 31, 2012, balance sheet.

1. Issued preferred stock with a par value of $125,000 for $200,000.
2. Purchased treasury stock (common) for $40,000.
3. Earned net income of $140,000.
4. Declared and paid cash dividends of $56,000.