The stockholders’ equity accounts of Sigma Corporation on January 1, 2010, were as follows.
|
Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) |
$ 300,000 |
|
Common Stock ($5 stated value, 300,000 shares authorized) |
1,000,000 |
|
Paid in Capital in Excess of Par Value—Preferred Stock |
15,000 |
|
Paid in Capital in Excess of Stated Value—Common Stock |
480,000 |
|
Retained Earnings |
688,000 |
|
Treasury Stock—Common (5,000 shares) |
40,000 |
During 2010 the corporation had the following transactions and events pertaining to its stockholders’ equity.
|
1 |
Issued 5,000 shares of common stock for $30,000. |
|
|
20 |
Purchased 1,000 additional shares of common treasury stock at $7 per |
|
|
1 |
Declared an 8% cash dividend on preferred stock, payable November 1. |
|
|
1 |
Paid the dividend declared on October 1. |
|
|
1 |
Declared a $0.50 per share cash dividend to common stockholders of |
|
|
31 |
Determined that net income for the year was $280,000. Paid the dividend |
Instructions
(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)
(b) Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Use T accounts.)
(c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2010.
(d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity ratio.