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On January 1, 2018, Fascom had the following account balances in its shareholders' equity accounts.

Common stock, $1 par, 250,000 shares issued 250,000
Paid-in capital—excess of par, common 500,000
Paid-in capital—excess of par, preferred 100,000
Preferred stock, $100 par, 10,000 shares outstanding 1,000,000
Retained earnings 2,000,000
Treasury stock, at cost, 5,000 shares 25,000

During 2018, Fascom Inc. had several transactions relating to common stock.

January 15: Declared a property dividend of 100,000 shares of Slowdown Company (book value $10 per share, fair value $9 per share).
February 17: Distributed the property dividend.
April 10: A 2-for-1 stock split was declared and distributed on outstanding common stock and effected in the form of a stock dividend. The fair value of the stock was $4 on this date.
July 18: Declared and distributed a 3% stock dividend on outstanding common stock. The fair value is $5 per share.
December 1: Declared a 50 cents per share cash dividend on the outstanding common shares.
December 20: Paid the cash dividend.

Required:
Without preparing journal entries, prepare the shareholders' equity section of Fascom's balance sheet as of December 31, 2018. Assume net income is $500,000 for 2018.

Respuesta :

Answer:

January 15, 2016        

Loss on investment [(100,000 - ($10 - $9)] 100,000

       To Investment in Slowdown Co.                    100,000

Retained earnings (100,000 x $9) 900,000

    To Property dividend payable                  900,000

February 17, 2016

Property dividend payable 900,000

   To Investment in Slowdown Co.        900,000

April 10, 2016

Retained earnings [(250,000 – 5,000) x $1] 245,000

      To Common stock                                                 245,000

July 18, 2016

Retained earnings [(3% x 490,000) x $5] 73,500

        To Common stock [(3% x 490,000) x $1]             14,700

        To Paid-in capital - excess of par                         58,800

December 1, 2016

Retained earnings (504,700 x $.50) 252,350

   To Cash dividends payable                        252,350

December 20, 2016

Cash dividends payable 252,350

       To Cash                          252,350

Explanation:

Part B( shareholders equity) is attached below.

Ver imagen hamzafarooqi188
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The stockholders' Equity Section of Fascom's Balance Sheet as of December 31, 2018, is as follows:

Issued Share Capital:

500,000 shares Common stock at $0.50 par      $250,000

Additional Paid-in capital—Common stock             500,000

10,000 shares, Preferred stock at $100 par         1,000,000

Additional Paid-in capital—Preferred stock             100,000

Retained earnings                                                  1,235,800

1,000 shares, Treasury stock at cost, $0.50           -25,000

Total Equity                                                         $3,060,800

Data and Calculations:

Jan. 1, 2018 Balances:

250,000 shares issued Common stock at $1 par,  $250,000

Additional Paid-in capital—Common stock               500,000

Additional Paid-in capital—Preferred stock               100,000

10,000 shares, Preferred stock at $100 par           1,000,000

Retained earnings                                                   2,000,000

500 shares, Treasury stock, at cost,                          -25,000

Net income for 2018 = $500,000

January 15: Loss on Investments in Slowdown $100,000 Investments in $100,000 Retained Earnings $900,000 Property Dividend Payable $900,000

February 17: Property Dividend Payable $900,000 Investments in Slowdown Company $900,000

April 10: A 2-for-1 stock split was declared and distributed on outstanding common stock and effected in the form of a stock dividend. The fair value of the stock was $4 on this date.

July 18: Stock Dividend $14,700 Stock Distributable $14,700

Stock Distributable $14,700 Common Stock $14,700 (490,000 x

3%) stock dividend on outstanding common stock. The fair value is $5 per share.

December 1: Cash Dividend $249,500 Dividend Payable $249,500 Declared a 50 cents per share cash dividend on the outstanding common shares. (499,000 shares x $0.50)

December 20: Dividend Payable $249,500 Cash $249,500

Retained earnings:

Jan. 1 2018 =       $2,000,000

Net income              500,000

Property dividend  -900,000

Stock dividend          -14,700

Cash dividend       -249,500

Loss in Slowdown -100,000

Dec. 31, 2018    $1,235,800

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