Question

CINRICH Corporation was organized on January 1, 2018. It is authorized to issue 22,000 shares of $3-noncumulative preferred shares and an unlimited number of common shares. The following share transactions were completed during the first year.

Jan.	1		Issued 84,000 common shares for cash at $3 per share.
Mar.	1		Issued 12,500 preferred shares for cash at $57 per share.
May	1		Issued 116,000 common shares for cash at $5 per share.
Sept.	1		Issued 4,800 common shares for cash at $6 per share.
Nov.	1		Issued 3,000 preferred shares for cash at $59 per share.
Dec.	1		Declared the annual preferred dividend to the preferred shareholders, to shareholders of record on December 15, payable on January 15, 2019.
Dec.	31		Reported net income of $168,000 for the year.

Please prepare the shareholders’ equity section of the statement of financial position at December 31, 2018.

Answer 1

CINRICH
Balance sheet (partial)
At December 31,2018
Stockholder's equity:
Preferred stock, no par, $3 non-cumulative, 15,500 shares issued and outstanding	$     889,500
Common stock, no par, 204,800 shares issued and outstanding	$     860,800
Paid in capital	$ 1,750,300
Retained earnings	$121,500
Total stockholder's equity	$ 1,871,800

Calculations:

Common shares
Shares	x	per share	=	Total
84000	x	$             3	=	$ 252,000
116000	x	$             5	=	$ 580,000
4800	x	$             6	=	$    28,800
204800				$ 860,800

Preference Shares
Shares	x	per share	=	Total
12500	x	$          57	=	$ 712,500
3000	x	$          59	=	$ 177,000
15500				$ 889,500

Retained earnings
Net income	$168,000
Less: Cash dividends (15,500 preferred x $3 dividend per share)	($46,500)
Retained earnings, Dec 31,2018		$121,500