Question

Problem 11-03A

On December 31, 2021, Wildhorse Co. had 1,310,000 shares of $6 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here.

Common Stock		$7,860,000
Additional Paid-in Capital		1,780,000
Retained Earnings		1,110,000

Transactions during 2022 and other information related to stockholders’ equity accounts were as follows.

1.		On January 10, issued at $109 per share 110,000 shares of $103 par value, 8% cumulative preferred stock.
2.		On February 8, reacquired 13,800 shares of its common stock for $12 per share.
3.		On May 9, declared the yearly cash dividend on preferred stock, payable June 10, to stockholders of record on May 31.
4.		On June 8, declared a cash dividend of $1.50 per share on the common stock outstanding, payable on July 10, to stockholders of record on July 1.
5.		Net income for 2022 was $3,531,000. I am not finding the correct answer for Retained Earnings. I am calculating Retained Earnings as; Retained Earnings= beginning retained earnings + net income - dividends declared Retained Earnings= 110000 + 3531000 - 2950700 = 790300 I am finding the dividends declared as (110000*103*.08)+(1310000+13800)*1.5 Please advise on how to find the correct retained earnings, I am told the numbers are right but I'm not putting them together correctly.

Answer 1

Solution:

Hope this helps! In case of any clarifications, kindly use the comment box below