ScenarioThe owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the company will be formed on January 1, 2020 and that Mulatto Company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock.Issued 65,000 shares of common stock. Stock has par value of $0.40 per share and was issued at $30 per share.Issued 10,000 shares of preferred stock at par value as payment in exchange for legal services.Exchanged 200,000 shares of common stock for land with an appraised value of $500,000 and a building with an appraised value of $700,000.Earned Net income $750,000.Paid dividends to preferred shareholders as well as $2 per share to common stockholders.Using the info above and as a guide:Prepare Mulatto Company’s Stockholders equity section of the balance sheet at December 31, 2020. (Hint!!!!!!!) The following information must be clearly stated/shown:information on par values,the number of shares authorized and issued where necessary.the sub total for the total paid in capital.Retained earnings.total stockholders’ equity.

The stockholder's equity refers to the value in the balance sheet of the company that is…

Answered: The owners are desirous of comparing…

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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Scenario

The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the company will be formed on January 1, 2020 and that Mulatto Company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock.

Issued 65,000 shares of common stock. Stock has par value of $0.40 per share and was issued at $30 per share.
Issued 10,000 shares of preferred stock at par value as payment in exchange for legal services.
Exchanged 200,000 shares of common stock for land with an appraised value of $500,000 and a building with an appraised value of $700,000.
Earned Net income $750,000.
Paid dividends to preferred shareholders as well as $2 per share to common stockholders.

Using the info above and as a guide:

Prepare Mulatto Company’s Stockholders equity section of the balance sheet at December 31, 2020. (Hint!!!!!!!) The following information must be clearly stated/shown:
- information on par values,
- the number of shares authorized and issued where necessary.
- the sub total for the total paid in capital.
- Retained earnings.
- total stockholders’ equity.

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