Concord Corp. completed the following transactions in 2014, the first year of op
ID: 2423959 • Letter: C
Question
Concord Corp. completed the following transactions in 2014, the first year of operation: 1. Issued 17,000 shares of $22 par common stock for $33 per share. 2. Issued 6,200 shares of $48 par, 4 percent, preferred stock at $50 per share. 3. Paid the annual cash dividend to preferred shareholders. 4. Issued a 5 percent stock dividend on the common stock. The market value at the dividend declaration date was $38 per share. 5. Later that year, issued a 2-for-1 split on the 17,850 shares of outstanding common stock. 6. Earned $269,500 of cash revenues and paid $130,200 of cash operating expenses.
Required
Record each of these events in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and net change in cash (NC). Use NA to indicate that an element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)
b.Prepare the stockholders’ equity section of the balance sheet at the end of 2014.
a.Record each of these events in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and net change in cash (NC). Use NA to indicate that an element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)
b.Prepare the stockholders’ equity section of the balance sheet at the end of 2014.
Explanation / Answer
Answer a.
Particulars
Cashflow
Type of cashflow
Issued 17,000 shares of $22 par common stock for $33 per share
561000
FA
Common stock (17000*22)
374000
Common stock Premium (17000*(33-22))
187000
Issued 6,200 shares of $48 par, 4 percent, preferred stock at $50 per share.
310000
FA
Prefered stock (6200*48)
297600
Prefered stock premium (6200*(50-48))
12400
Paid the annual cash dividend to preferred shareholders.
-11904
FA
Divident (4%*(6200*48))
11904
Issued a 5 percent stock dividend on the common stock
0
NA
Divident (5%*(17850*22))
19635
Later that year, issued a 2-for-1 split on the 17,850 shares of outstanding common stock
0
NA
Earned $269,500 of cash revenues
-269500
OA
paid $130,200 of cash operating expenses
-130200
OA
Net cash change
459396
NC
Answer b.
Opening common stock of 850 shares after split 1700@11
18700
Common stock 17000 issued during the year after split (34000*11)
374000
Common stock Premium (17000*(33-22))
187000
Prefered stock (6200*48)
297600
Prefered stock premium (6200*(50-48))
12400
Total earning (269500-130200- 11904 (divident to preference share holders)
127396
Issued a 5 percent stock dividend on the common stockt (5%*(17850*22))
-19635
Share holder's net equity
997461
* As per statement " Later that year, issued a 2-for-1 split on the 17,850 shares of outstanding common stock". During the year only 17000 shares were issued. It means that 850 share were opening capital hence accordingly these have been included in calculations.
Particulars
Cashflow
Type of cashflow
Issued 17,000 shares of $22 par common stock for $33 per share
561000
FA
Common stock (17000*22)
374000
Common stock Premium (17000*(33-22))
187000
Issued 6,200 shares of $48 par, 4 percent, preferred stock at $50 per share.
310000
FA
Prefered stock (6200*48)
297600
Prefered stock premium (6200*(50-48))
12400
Paid the annual cash dividend to preferred shareholders.
-11904
FA
Divident (4%*(6200*48))
11904
Issued a 5 percent stock dividend on the common stock
0
NA
Divident (5%*(17850*22))
19635
Later that year, issued a 2-for-1 split on the 17,850 shares of outstanding common stock
0
NA
Earned $269,500 of cash revenues
-269500
OA
paid $130,200 of cash operating expenses
-130200
OA
Net cash change
459396
NC
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.