Major League Apparel has two classes of stock authorized: 4%, $10 par preferred,

Question

Major League Apparel has two classes of stock authorized: 4%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2018, its first year of operations: January 2 Issue 120,000 shares of common stock for $53 per share. February 14 Issue 43,000 shares of preferred stock for $13 per share. May 8 Repurchase 12,000 shares of its own common stock for $43 per share. May 31 Reissue 6,000 shares of treasury stock for $48 per share. December 1 Declare a cash dividend on its common stock of $0.40 per share and a $17,200 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint: Dividends are not paid on treasury stock.) December 30 Pay the cash dividends declared on December 1.

Explanation / Answer

Statement of Retained Earnings For the Year ended Dec 31, 2018 Beginning Balance                           -   Net Income - 2018 - Not Given                           -   Cash Dividends - Common Stock - $0.40 X 114,000 shares         (45,600.00) Cash Dividends - Preference         (17,200.00) Ending Balance         (62,800.00)

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