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Osgood Film Studios reported the following alphabetical list of shareholders’ equity items

On January 1, Year 5, Osgood Film Studios reported the following alphabetical list of shareholders’ equity items:

Additional paid-in capital on common stock$203,150
Additional paid-in capital on preferred stock14,000
Common stock, $2 par95,600
Preferred stock, $100 par70,000
Retained earnings208,000

During the year, the company sold 2,500 shares of common stock for $11 per share and 440 shares of preferred stock for $127 per share. It also earned income of $96,000 and paid dividends of $8 per share on the preferred stock and $2.20 per share on the common stock outstanding at the end of the year.

Required:

Prepare Osgood’s statement of shareholders’ equity (include retained earnings) for Year 5.

Answer:

 Preferred Stock $100 par Common stock $2 par Additional Paid-in Capital on Preferred Stock Additional Paid-in Capital on Common Stock Retained Earnings Total
Balance 1/1/Year 570,00095,60014,000203,150208,000  590,750
Common stock issued5,00022,500          27,500
Preferred stock issued44,000         11,88055,880
Net income96,00096,000
Cash dividend paid on preferred(9,120)(9,120)
Cash dividend paid on common(110,660)(110,660)
Balance 12/31/Year 5      114,000      100,600         25,880         225,650    184,220 650,350

Dividend Calculation

Preferred = ($70,000 + 40,000) x $8/ 100 = $9,120

Common Stock = ($95,600 + 5,000) x 2.20 / $2 = $110,660

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