Sun Corporation received a charter that authorized the issuance of 88,000 shares of $5 par common stock and 20,000 shares of $100 par, 6 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation: Year 1 Jan. 5 Sold 13,200 shares of the $5 par common stock for $7 per share. 12 Sold 2,000 shares of the 6 percent preferred stock for $110 per share. Apr. 5 Sold 17,600 shares of the $5 par common stock for $9 per share. Dec. 31 During the year, earned $316,300 in cash revenue and paid $237,300 for cash operating expenses. 31 Declared the cash dividend on the outstanding shares of preferred stock for Year 1. The dividend will be paid on February 15 to stockholders of record on January 10, Year 2. Year 2 Feb. 15 Paid the cash dividend declared on December 31, Year 1. Mar. 3 Sold 3,000 shares of the $100 par preferred stock for $120 per share. May 5 Purchased 400 shares of the common stock as treasury stock at $10 per share. Dec. 31 During the year, earned $253,800 in cash revenues and paid $176,000 for cash operating expenses. 31 Declared the annual dividend on the preferred stock and a $0.75 per share dividend on the common stock. Required Organize the transaction data in accounts under an accounting equation. Prepare the stockholders’ equity section of the balance sheet at December 31, Year 1. Prepare the balance sheet at December 31, Year 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sun Corporation received a charter that authorized the issuance of 88,000 shares of $5 par common stock and 20,000 shares of $100 par, 6 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation:

Year 1

Jan.	5	Sold 13,200 shares of the $5 par common stock for $7 per share.
	12	Sold 2,000 shares of the 6 percent preferred stock for $110 per share.
Apr.	5	Sold 17,600 shares of the $5 par common stock for $9 per share.
Dec.	31	During the year, earned $316,300 in cash revenue and paid $237,300 for cash operating expenses.
	31	Declared the cash dividend on the outstanding shares of preferred stock for Year 1. The dividend will be paid on February 15 to stockholders of record on January 10, Year 2.

Year 2

Feb.	15	Paid the cash dividend declared on December 31, Year 1.
Mar.	3	Sold 3,000 shares of the $100 par preferred stock for $120 per share.
May	5	Purchased 400 shares of the common stock as treasury stock at $10 per share.
Dec.	31	During the year, earned $253,800 in cash revenues and paid $176,000 for cash operating expenses.
	31	Declared the annual dividend on the preferred stock and a $0.75 per share dividend on the common stock.

Required

Organize the transaction data in accounts under an accounting equation.
Prepare the stockholders’ equity section of the balance sheet at December 31, Year 1.
Prepare the balance sheet at December 31, Year 2.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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