The shareholders' equity section of Clampett Oil Ltd. at December 31,2020, was as follows:$3 cumulative preferred shares, 10,000 shares authorized, 9,000shares issued$900,000Common shares, with 500,000 shares authorized, 400,000 sharesissued2,000,000Preferred share dividends were not declared in 2020 and are inarrears.On September 15, 2021, the Board of Directors declared dividendson the preferred shares for 2020 and 2021. Shareholders of recordon October 1, 2021 were eligible to receive the dividends which werepayable on October 15, 2021.On November 1, 2021, the Board of Directors declared a $0.50 pershare dividend on the common shares. The dividends are payableNovember 30, 2021, to shareholders of record on November 15,2021.Instructions1) Prepare Clampett Oil Ltd. journal entries on the following dates, ifnecessary: September 15, October 1, October 15, November 1,November 15, November 30. If no entry is needed write "No entryrequired."2) The market value per common share of Clampett Oil Ltd. is $20.Do investors perceive this company negatively or positively relativeto the equity investment made historically in the company? How canyou tell?

Date Particulars Debit Credit Sep 15,2021 Retained Earnings A/c 54000 To Preference…

Answered: The shareholders' equity si 2020, was…

The shareholders' equity si 2020, was as follows: $3 cumulative preferred sh shares issued $900,00 Common shares, with 500

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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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

The shareholders' equity section of Clampett Oil Ltd. at December 31,
2020, was as follows:
$3 cumulative preferred shares, 10,000 shares authorized, 9,000
shares issued
$900,000
Common shares, with 500,000 shares authorized, 400,000 shares
issued
2,000,000
Preferred share dividends were not declared in 2020 and are in
arrears.
On September 15, 2021, the Board of Directors declared dividends
on the preferred shares for 2020 and 2021. Shareholders of record
on October 1, 2021 were eligible to receive the dividends which were
payable on October 15, 2021.
On November 1, 2021, the Board of Directors declared a $0.50 per
share dividend on the common shares. The dividends are payable
November 30, 2021, to shareholders of record on November 15,
2021.
Instructions
1) Prepare Clampett Oil Ltd. journal entries on the following dates, if
necessary: September 15, October 1, October 15, November 1,
November 15, November 30. If no entry is needed write "No entry
required."
2) The market value per common share of Clampett Oil Ltd. is $20.
Do investors perceive this company negatively or positively relative
to the equity investment made historically in the company? How can
you tell?

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