Transaction Analysis: Shareholders’ Equity
Use the balance sheet equation to calculate the ending balances in each of the following accounts, given the beginning balances and various transactions during the year.
|
Beginning Balances |
|
|
Cash |
$ 25,000,000 |
|
Other assets |
100,000,000 |
|
Convertible bonds payable |
20,000,000 |
|
Convertible preferred stock, $10 par value |
30,000,000 |
|
Common stock, $10 par value |
40,000,000 |
|
Retained earnings |
35,000,000 |
Transactions
1. Convert half of the convertible bonds payable to common stock at a conversion price of $40.00 per share.
2. Convert all the convertible preferred stock to common stock at 1.5 shares of preferred stock for each share of common stock (conversion ratio).
3. Purchase 500,000 shares of its own common stock as treasury stock at a market price of $12.50.
4. Earn net income of $17,500,000.
5. Pay dividends of $5,000,000.
6. Issue one million shares of common stock at the market price of $15.00 per share in exchange for a parcel of land priced at $20,000,000.