Sun Corporation received a charter that authorized the issuance of 93,000 shares of $7 par common stock and 18,000 shares of $75 par, 7 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation: Year 1 January 5 Sold 13,950 shares of the $7 par common stock for $9 per share. 12 Sold 1,800 shares of the 7 percent preferred stock for $85 per share. April 5 Sold 18,600 shares of the $7 par common stock for $11 per share. December 31 During the year, earned $302,000 in cash revenue and paid $242,900 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 February 15 Paid the cash dividend declared on December 31, Year 1. March 3 Sold 2,700 shares of the $75 par preferred stock for $95 per share. May 5 Purchased 400 shares of the common stock as treasury stock at $14 per share. December 31 During the year, earned $245,100 in cash revenues and paid $174,700 for cash operating expenses. 31 Declared the annual dividend on the preferred stock and a $0.25 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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Question

Sun Corporation received a charter that authorized the issuance of 93,000 shares of $7 par common stock and 18,000 shares of $75 par, 7 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation:

Year 1

January 5	Sold 13,950 shares of the $7 par common stock for $9 per share.
12	Sold 1,800 shares of the 7 percent preferred stock for $85 per share.
April 5	Sold 18,600 shares of the $7 par common stock for $11 per share.
December 31	During the year, earned $302,000 in cash revenue and paid $242,900 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

February 15	Paid the cash dividend declared on December 31, Year 1.
March 3	Sold 2,700 shares of the $75 par preferred stock for $95 per share.
May 5	Purchased 400 shares of the common stock as treasury stock at $14 per share.
December 31	During the year, earned $245,100 in cash revenues and paid $174,700 for cash operating expenses.
31	Declared the annual dividend on the preferred stock and a $0.25 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.

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