Oakwood Inc. is a public enterprise whose shares are traded inthe over-the-counter market. At December 31, 2015, Oakwood had6,000,000 authorized shares of $10 par value common stock, of which2,000,000 shares were issued and outstanding. The shareholders'equity accounts at December 31, 2015, had the followingbalances:
Common stock $20,000,000 Additional paid-in capital on common stock 7,500,000 Retained earnings 6,470,000
Transactions during 2016 and other information relating to theshareholders' equity accounts were as follows:
On January 5, 2016, Oakwood issued at $54 per share, 100,000shares of $50 par value, 9%, cumulative convertible preferredstock. Each share of preferred stock is convertible, at the optionof the holder, into 2 shares of common stock. Oakwood had 600,000authorized shares of preferred stock.
On February 2, 2016, Oakwood reacquired 20,000 shares of itscommon stock for $16 per share. Oakwood uses the cost method toaccount for treasury stock.
On April 27, 2016, Oakwood sold 500,000 shares (previouslyunissued) of $10 par value common stock to the public at $17 pershare.
On June 18, 2016, Oakwood declared a cash dividend of $1 pershare of common stock, payable on July 13, 2016, to shareholders ofrecord on July 2, 2016.
On November 9, 2016, Oakwood sold 10,000 shares of treasurystock for $21 per share.
On December 14, 2016, Oakwood declared the yearly cash dividendon preferred stock, payable on January 14, 2017, to shareholders ofrecord on December 31, 2016.
On January 18, 2017, before the books were closed for 2016,Oakwood became aware that the ending inventories at December 31,2015, were understated by $300,000 (the after-tax effect on 2015net income was $210,000). The appropriate correcting entry wasrecorded the same day.
After correcting the beginning inventory, net income for 2016was $4,500,000.
Required:
1. Prepare a statement of retained earnings for Oakwood for theyear ended December 31, 2016. Assume that only single-periodfinancial statements for 2016 are presented.
2. Prepare the shareholders' equity section of Oakwood's balancesheet at December 31, 2016.
Oakwood Inc. is a public enterprise whose shares are traded inthe over-the-counter market. At December 31, 2015, Oakwood had6,000,000 authorized shares of $10 par value common stock, of which2,000,000 shares were issued and outstanding. The shareholders'equity accounts at December 31, 2015, had the followingbalances:
| Common stock | $20,000,000 | |
| Additional paid-in capital on common stock | 7,500,000 | |
| Retained earnings | 6,470,000 |
Transactions during 2016 and other information relating to theshareholders' equity accounts were as follows:
On January 5, 2016, Oakwood issued at $54 per share, 100,000shares of $50 par value, 9%, cumulative convertible preferredstock. Each share of preferred stock is convertible, at the optionof the holder, into 2 shares of common stock. Oakwood had 600,000authorized shares of preferred stock.
On February 2, 2016, Oakwood reacquired 20,000 shares of itscommon stock for $16 per share. Oakwood uses the cost method toaccount for treasury stock.
On April 27, 2016, Oakwood sold 500,000 shares (previouslyunissued) of $10 par value common stock to the public at $17 pershare.
On June 18, 2016, Oakwood declared a cash dividend of $1 pershare of common stock, payable on July 13, 2016, to shareholders ofrecord on July 2, 2016.
On November 9, 2016, Oakwood sold 10,000 shares of treasurystock for $21 per share.
On December 14, 2016, Oakwood declared the yearly cash dividendon preferred stock, payable on January 14, 2017, to shareholders ofrecord on December 31, 2016.
On January 18, 2017, before the books were closed for 2016,Oakwood became aware that the ending inventories at December 31,2015, were understated by $300,000 (the after-tax effect on 2015net income was $210,000). The appropriate correcting entry wasrecorded the same day.
After correcting the beginning inventory, net income for 2016was $4,500,000.
Required:
1. Prepare a statement of retained earnings for Oakwood for theyear ended December 31, 2016. Assume that only single-periodfinancial statements for 2016 are presented.
2. Prepare the shareholders' equity section of Oakwood's balancesheet at December 31, 2016.
