The post-closing trial balance of Storey Corporation at December 31, 2017, conta

Question

The post-closing trial balance of Storey Corporation at December 31, 2017, contains the following stockholders' equity accounts Preferred Stock (16,000 shares Issued) Common Stock (259,000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock Common Stock Dividends Distributable 800,000 2,590,000 259,000 10,000 59,000 921,900 Retained Earnings A review of the accounting records reveals the following No errors have been made in recording 2017 transactions or in preparing the closing entry for net income. 2. preferred stock is $50 par, 6%, and cumulative, 16,000 shares have been outstanding since January 1, 2016. 3. Authorized stock is 21,000 shares of preferred, 518,000 shares of common with a $10 par value 4 The January 1 balance in Retained Earnings was $1,120,000. 5. On July 1, 21,600 shares of common stock were issued for cash at $18 per share. 6. On September 1, the company discovered an understatement error of $87,000 in computing salaries and wages expense in 2016. The net of tax efflect of s60,900 was properly debited directly to Retained Earnings 7. A cash dividend of %259,000 was declared and property allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders n 2016. 8. on December 31, a 10% cormmon stock dividend was declared out of retained earnings on common stock when the market price per share was sis 9. Net income for the year was $588,000. 10. On December 31, 2017, the directors authorized disclosure of a $193,000 restriction of retained earnings for plant expansion. (Use Note Xx.)

Explanation / Answer

Answer 1. Retained Earnings 1-Sep Prior Period adjustment            60,900 1-Jan Beg. Balance          921,900 1-Oct Cash Dividend          259,000 31-Dec Net Income          588,000 31-Dec Stock Dividend          505,080 31-Dec Balance          684,920 Storey Corporation Retained Earning Statement For the Year Ended Dec 31, 2017 Beginning Balance              921,900 Correction of overstatement of Income              (60,900) Balance Jan 1 - adjusted              861,000 Add: Net Income              588,000          1,449,000 Less: Cash Dividends         (259,000) Less: Stock Dividends         (505,080)           (764,080) Balance , Dec 31              684,920 Storey Corporation Balance Sheet (Partial) For the Year Ended Dec 31, 2017 Stockholders' Equity Paid in Capital Capital Stock 6% Preferred Stock - Authorized 21,000 Shares, Issued 16,000 Shares, Par value $50              800,000 Common Stock Issued - 280,600 Shares @ $10        2,806,000 Stock Dividend - 28060 shares @$10           280,600          3,086,600 Total Capital Stock          3,886,600 Paid in Capital in Excess of Par - Preferred Stock           259,000 Paid in Capital in Excess of Par - Common Stock           807,280          1,066,280 Total Paid In Capital          4,952,880 Retained Earnings              684,920 Total Stockholders' Equity          5,637,800 Note - Retained Earnings are restricted for Plant Expansion $193,000

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