Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $13.9 non-cumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: 2020 Jan. 12 Issued 40,250 common shares at $4.3 each. 20 Issued 7,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $31,000. 31 Issued 75,000 common shares in exchange for land, building, and equipment, which have fair market values of $355,000, $475,000, and $43,000, respectively. Mar. 4 Purchased equipment at a cost of $8,110 cash. This was thought to be a special bargain price. It was felt that at least $10,300 would normally have had to be paid to acquire this equipment. Dec. 31 During 2020, the company incurred a loss of $91,000. The Income Summary account was closed. 2021 Jan. 4 Issued 3,000 preferred shares at $67 per share. Dec. 31 The Income Summary account was closed. Profit for 2021 was $211,000. 2022 Dec. 4 The company declared a cash dividend of $0.72 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. 18 Paid the dividends declared on December 4. 31 Profit for the year ended December 31, 2022, was $173,075. The Income Summary account was closed. 3. Prepare the equity section on the December 31, 2022, balance sheet. Analysis Component: Determine the net assets of Hammond Manufacturing Inc. for 2020, 2021, and 2022. Is the trend favourable or unfavourable?
Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $13.9 non-cumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: 2020 Jan. 12 Issued 40,250 common shares at $4.3 each. 20 Issued 7,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $31,000. 31 Issued 75,000 common shares in exchange for land, building, and equipment, which have fair market values of $355,000, $475,000, and $43,000, respectively. Mar. 4 Purchased equipment at a cost of $8,110 cash. This was thought to be a special bargain price. It was felt that at least $10,300 would normally have had to be paid to acquire this equipment. Dec. 31 During 2020, the company incurred a loss of $91,000. The Income Summary account was closed. 2021 Jan. 4 Issued 3,000 preferred shares at $67 per share. Dec. 31 The Income Summary account was closed. Profit for 2021 was $211,000. 2022 Dec. 4 The company declared a cash dividend of $0.72 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. 18 Paid the dividends declared on December 4. 31 Profit for the year ended December 31, 2022, was $173,075. The Income Summary account was closed. 3. Prepare the equity section on the December 31, 2022, balance sheet. Analysis Component: Determine the net assets of Hammond Manufacturing Inc. for 2020, 2021, and 2022. Is the trend favourable or unfavourable?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...
Related questions
Question
Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $13.9 non-cumulative
2020 | |||
Jan. | 12 | Issued 40,250 common shares at $4.3 each. | |
20 | Issued 7,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $31,000. | ||
31 | Issued 75,000 common shares in exchange for land, building, and equipment, which have fair market values of $355,000, $475,000, and $43,000, respectively. | ||
Mar. | 4 | Purchased equipment at a cost of $8,110 cash. This was thought to be a special bargain price. It was felt that at least $10,300 would normally have had to be paid to acquire this equipment. | |
Dec. | 31 | During 2020, the company incurred a loss of $91,000. The Income Summary account was closed. | |
2021 | |||
Jan. | 4 | Issued 3,000 preferred shares at $67 per share. | |
Dec. | 31 | The Income Summary account was closed. Profit for 2021 was $211,000. | |
2022 | |||
Dec. | 4 | The company declared a cash dividend of $0.72 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. | |
18 | Paid the dividends declared on December 4. | ||
31 | Profit for the year ended December 31, 2022, was $173,075. The Income Summary account was closed. |
3. Prepare the equity section on the December 31, 2022,
Analysis Component:
Determine the net assets of Hammond Manufacturing Inc. for 2020, 2021, and 2022. Is the trend favourable or unfavourable?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,