Exercise 10-62 (Algorithmic) Restrictions on Retained Earnings At December 31, 2
ID: 2430717 • Letter: E
Question
Exercise 10-62 (Algorithmic)
Restrictions on Retained Earnings
At December 31, 2010, Longfellow Clothing had $226,700 of retained earnings, all unrestricted. During 2011, Longfellow earned net income of $92,000 and declared and paid cash dividends on common stock of $21,800. During 2011, 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, $53,000. At December 31, 2011, Long-fellow has 30,000 shares of $5 par common stock issued and outstanding. Additional paid-in capital—common stock is $222,900.
Prepare the stockholders' equity portion of Longfellow's December 31, 2011, balance sheet.
Longfellow Clothing
Balance Sheet (Partial)
December 31, 2011
Stockholders' equity:
$
Total capital stock
$
Retained earnings:
$
Total stockholders' equity
$
Prepare the stockholders' equity portion of Longfellow's December 31, 2011, balance sheet.
Longfellow Clothing
Balance Sheet (Partial)
December 31, 2011
Stockholders' equity:
$
Total capital stock
$
Retained earnings:
$
Total stockholders' equity
$
Explanation / Answer
Stockholders' equity portion of Longfellow's December 31, 2011, balance sheet:
Longfellow Clothing
Balance sheet (Partial) as on Dec 31, 2011
Stockholder's Equity: Common stock, $5 par value, issued 30,000 shares $150,000 Adiitional paid in capital $222,900 Total Capital stock $372,900 Retained earnings: Unrestricted $243,900 Restricted $53,000 $296,900 Total Stockholder's equity $669,800Related Questions
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