Chapter 10, Problem 56BP

Analyzing stockholders’ equity (Learning Objectives 2, 3, & 4) 20-25 min.

Cascade Inn, Inc., included the following stockholders’ equity on its year-end balance sheet at December 31, 2018:

Stockholders’ Equity	$Millions
Paid-in Capital:
Preferred Stock, 7% cumulative, par value $10 per share;	$71,000
40,000 shares authorized, 7,100 shares issued and outstanding
Common Stock, par value $4 рer share; 700,000 shares
authorized, 235,000 shares issued and outstanding	940,000
Paid-in Capital in Excess of Par—Common	75,000
Total Paid-in Capital	$1,086,000
Retired Earnings	210,000
Total Stockholders’ Equity	$1,296,000

Requirements

1. 1. Identify the different issues of stock Cascade Inn, Inc., has outstanding.
2. 2. Give the two entries to record issuance of Cascade Inn, Inc.’s stock. Assume all the stock was issued for cash. Explanations are not required.
3. 3. Assume that preferred dividends are in arrears for 2017 and 2018. Record the declaration of a $40,000 cash dividend on December 30, 2019. Assume no change in the preferred stock account in 2019. Use separate Dividends Payable accounts for preferred and common stock. An explanation is not required.