Homestead Oil Corp. was incorporated on January 1, 2019, and issued the following stock for cash:710,000 shares of no-par common stock were authorized; 140,000 shares were issued on January 1, 2019, at $19.00 per share.290,000 shares of $100 par value, 8.50% cumulative, preferred stock were authorized; 62,000 shares were issued on January 1, 2019, at $140 per share.Net income for the years ended December 31, 2019 and 2020 was $1,240,000 and $2,670,000, respectively.No dividends were declared or paid during 2019. However, on December 28, 2020, the board of directors of Homestead declared dividends of $1,670,000, payable on February 12, 2021, to holders of record as of January 19, 2021. ## Chapter 8 Homework### Required Information**Homestead Oil Corp.** was incorporated on January 1, 2019, and issued the following stock for cash:- **Common Stock:** - 710,000 shares of no-par common stock were authorized. - 140,000 shares were issued on January 1, 2019, at $19.00 per share.- **Preferred Stock:** - 290,000 shares of $100 par value, 8.50% cumulative, preferred stock were authorized. - 62,000 shares were issued on January 1, 2019, at $140 per share.- **Net Income:** - For the years ended December 31, 2019, and 2020 was $1,240,000 and $2,670,000, respectively.- **Dividends:** - No dividends were declared or paid during 2019. - On December 28, 2020, the board of directors of Homestead declared dividends of $1,670,000, payable on February 12, 2021, to holders of record as of January 19, 2021.### Required:1. **Issuance of Stock:** Use the horizontal model for the issuance of common and preferred stock on January 1, 2019. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.) **Balance Sheet and Income Statement Columns:** - **Assets:** - **Liabilities:** - **Stockholders' Equity:** - **Net Income:** - **Revenues:** - **Expenses:** 2. **Declaration of Dividends:** Use the horizontal model for the declaration of dividends on December 28, 2020. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)### Table ExplanationThe table provided is a matrix with columns for the balance sheet (Assets, Liabilities, Stockholders' Equity) and the income statement (Net Income, Revenues, Expenses). The rows are left blank for students to fill in the financial effects of the transactions described (issuance of stock and declaration of dividends). Use this table to input how each transaction affects the various elements of the financial statements.**Note**: Enter **Chapter 8 Homework****Part 1 of 2****Question 5****2.** Use the horizontal model for the declaration of dividends on December 28, 2020. Indicate the financial statement effect. *(Enter decreases with a minus sign to indicate a negative financial statement effect.)*- **Table:** - **Balance Sheet:** - **Assets = Liabilities + Stockholders' Equity** - **Income Statement:** - **Net Income = Revenues - Expenses****3.** Use the horizontal model for the payment of dividends on February 12, 2021. Indicate the financial statement effect. *(Enter decreases with a minus sign to indicate a negative financial statement effect.)*- **Table:** - **Balance Sheet:** - **Assets = Liabilities + Stockholders' Equity** - **Income Statement:** - **Net Income = Revenues - Expenses****Navigation**- Previous: Page 4 of 18- Next: Page 6 of 18**Tools**- eBook- Print- References---This exercise requires you to adjust accounting records to reflect the declaration and payment of dividends and analyze the impact on financial statements using a horizontal model approach. The diagrams represent a simplified layout of the balance sheet and income statement, prompting students to enter positive or negative amounts to indicate financial changes.

Dividend Declared & Paid: Dividends declared refers to dividends that have been approved by the…

Answered: Homestead Oil Corp. was incorporated on…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q