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.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 5MC: Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par...

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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.

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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