Identifying and Analyzing Financial Statement Effects of Dividends
The stockholders’ equity of DiFrancesco Company at March 31, 2019 is shown below.
| 4% preferred stock, $1,000 par value, 25,000 shares authorized; 10,000 shares issued and outstanding | $10,000,000 |
| Common stock, $1 par value, 3,000,000 shares authorized; 700,000 shares issued and outstanding | 700,000 |
| Additional paid-in capital—preferred stock | 60,000 |
| Additional paid-in capital—common stock | 17,150,000 |
| Retained earnings | 49,005,689 |
| Total stockholders’ equity | $76,915,689 |
The following transactions, among others, occurred during the fiscal year ended March 31, 2020.
April 15, 2019 Declare and pay preferred dividends of $400,000
April 15, 2019 Declare and pay common dividends of $1.30 per share
October 1, 2019 Execute a 3-for-1 stock split of the common stock when the stock price was $140 per share.
March 1, 2020 Declare and pay common dividends of $0.50 per share
(a) Use the financial statement effects template to indicate the effects of these separate transactions.
Use negative signs with answers, when appropriate.
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Balance Sheet
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|---|---|---|---|---|---|---|---|---|---|---|
| Transaction | Cash Asset | + |
Noncash Assets |
= | Liabilities | + |
Contributed Capital |
+ |
Earned Capital |
|
| Apr. 15 | Answer | Answer | Answer | Answer | Answer | |||||
| Apr. 15 | Answer | Answer | Answer | Answer | Answer | |||||
| Oct. 1 | Answer | Answer | Answer | Answer | Answer | |||||
| Mar. 1 | Answer | Answer | Answer | Answer | Answer |
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Income Statement
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|---|---|---|---|---|
| Revenue | – | Expenses | = |
Net Income |
| Answer | Answer | Answer | ||
| Answer | Answer | Answer | ||
| Answer | Answer | Answer | ||
| Answer | Answer | Answer |
(b) At March 31, 2020, the company reported net income for the year of $8,900,610. Compute retained earnings as of March 31, 2020.
$Answer
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