The stockholders' equity section of Brent Corporation's balance sheet as of December 31, 2016 Stockholders' Equity Common stock, $5 par value; authorized, 2,000,000 shares; issued, 400,000 shares $2,000,000 Paid in capital in excess of par $850,000 Retained Earnings $3,000,000 Total $5,850,000 The following events occurred during 2017: 1.) Jan 5 10,000 shares of authorized and unissued common stock were sold for $9 per share. 2.) Jan 16 Declared a cash dividend of 40 cents per share, payable February 15 to stockholders of record on February 5. 3.) Feb 11 40,000 shares of authorized and unissued common stock were sold for $11 per share. 4.)Apr 1 A two-for-one split was carried out. The par value of the stock was reduced to $2.50 per share. Market value on March 31 was $18 per share. 5.) Jul 1 A 10% stock dividend was declared and issued. Market value is currently $10 per share. 6.) Aug 1 A cash dividend of 40 cents per share was declared, payable September 1 to stockholders of record on August 21. A.) Prepare the necessary journal entries for the above transactions B.)As of August 1, how many shares of common stock were authorized, issued, and outstanding?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The
Stockholders' Equity
Common stock, $5 par value; authorized, 2,000,000 shares;
issued, 400,000 shares $2,000,000
Paid in capital in excess of par $850,000
Total $5,850,000
The following events occurred during 2017:
1.) Jan 5 10,000 shares of authorized and unissued common stock were sold for $9 per share.
2.) Jan 16 Declared a cash dividend of 40 cents per share, payable February 15 to stockholders of record on February 5.
3.) Feb 11 40,000 shares of authorized and unissued common stock were sold for $11 per share.
4.)Apr 1 A two-for-one split was carried out. The par value of the stock was reduced to $2.50 per share. Market value on March 31 was $18 per share.
5.) Jul 1 A 10% stock dividend was declared and issued. Market value is currently $10 per share.
6.) Aug 1 A cash dividend of 40 cents per share was declared, payable September 1 to stockholders of record on August 21.
A.) Prepare the necessary
B.)As of August 1, how many shares of common stock were authorized, issued, and outstanding?
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