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Restrictions on Retained Earnings At December 31, 2018, Longfellow Clothing had $226,700 of retained earnings, all unrestricted. During 2019, Longfellow earned net income of S92.000 and declared and paid cash dividends on common stock of $21,800. During 2019, Longfellow sold a bond issue with a covenant that required Longfellow to transfer from retained earnings to restricted retained earnings an amount equal to the principal of the bond issue, $50,000. At December 31, 2019, Longfellow has 30,000 shares of $5 par common stock issued and outstanding. Additional paid-in capital-common stock is $236,500. Required: Prepare the stockholders' equity portion of Longfellow’s December 31, 2019 balance sheet.

BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 10, Problem 77E
Textbook Problem

Restrictions on Retained Earnings

At December 31, 2018, Longfellow Clothing had $226,700 of retained earnings, all unrestricted. During 2019, Longfellow earned net income of S92.000 and declared and paid cash dividends on common stock of $21,800. During 2019, Longfellow sold a bond issue with a covenant that required Longfellow to transfer from retained earnings to restricted retained earnings an amount equal to the principal of the bond issue, $50,000. At December 31, 2019, Longfellow has 30,000 shares of $5 par common stock issued and outstanding. Additional paid-in capital-common stock is $236,500.

Required:

Prepare the stockholders' equity portion of Longfellow’s December 31, 2019 balance sheet.

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Chapter 10 Solutions

Cornerstones of Financial Accounting
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