6) Day 5Exercise 18-23 (Static) Transactions affecting retained earnings [LO18-6, 18-7, 18-8]The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2020: Paid-in capital: Preferred stock, 8.8%, 90,000 shares at $1 par$90,000 Common stock, 364,000 shares at $1 par 364,000 Paid-in capital—excess of par, preferred 1,437,000 Paid-in capital—excess of par, common 2,574,000 Retained earnings 9,735,000 Treasury stock, at cost; 4,000 common shares (44,000)Total shareholders' equity$14,156,000 During 2021, several events and transactions affected the retained earnings of Consolidated Paper. Required:1. Prepare the appropriate entries for these events: On March 3, the board of directors declared a property dividend of 240,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $700,000). The investment shares had a fair value of $3 per share and were distributed March 31 to shareholders of record March 15.On May 3, a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $11 per share.On July 5, a 2% common stock dividend was declared and distributed. The market value of the common stock was $11 per share.On December 1, the board of directors declared the 8.8% cash dividend on the 90,000 preferred shares, payable on December 28 to shareholders of record December 20.On December 1, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable on December 28 to shareholders of record December 20.2. Prepare the shareholders' equity section of the balance sheet for Consolidated Paper, Inc., at December 31, 2021. Net income for the year was $810,000.

Shareholder is the person holding the shares.Consolidated sheet is the sheet which consists of a…

Answered: Exercise 18-23 (Static) Transactions…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 99.4C

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Exercise 18-23 (Static) Transactions affecting retained earnings [LO18-6, 18-7, 18-8]

The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2020:


Paid-in capital:
Preferred stock, 8.8%, 90,000 shares at $1 par	$	90,000
Common stock, 364,000 shares at $1 par		364,000
Paid-in capital—excess of par, preferred		1,437,000
Paid-in capital—excess of par, common		2,574,000
Retained earnings		9,735,000
Treasury stock, at cost; 4,000 common shares		(44,000	)
Total shareholders' equity	$	14,156,000

During 2021, several events and transactions affected the retained earnings of Consolidated Paper.

Required:
1. Prepare the appropriate entries for these events:

On March 3, the board of directors declared a property dividend of 240,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $700,000). The investment shares had a fair value of $3 per share and were distributed March 31 to shareholders of record March 15.
On May 3, a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $11 per share.
On July 5, a 2% common stock dividend was declared and distributed. The market value of the common stock was $11 per share.
On December 1, the board of directors declared the 8.8% cash dividend on the 90,000 preferred shares, payable on December 28 to shareholders of record December 20.
On December 1, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable on December 28 to shareholders of record December 20.

2. Prepare the shareholders' equity section of the balance sheet for Consolidated Paper, Inc., at December 31, 2021. Net income for the year was $810,000.

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