AB 116 WEEK 8 PROBLEM 14-3A

AB 116 WEEK 8 The post-closing trial balance of Storey Corporation at December 31 2014 contains the following stockholders equity accounts.
Preferred Stock (15,700 shares issued)		$785,000
Common Stock (253,300 shares issued)		3,292,900
Paid-in Capital in Excess of Par—Preferred Stock		250,200
Paid-in Capital in Excess of Par—Common Stock		398,000
Common Stock Dividends Distributable		329,290
Retained Earnings		866,930

A review of the accounting records reveals the following.
1.		No errors have been made in recording 2014 transactions or in preparing the closing entry for net income.
2.		Preferred stock is $50 par, 6%, and cumulative; 15,700 shares have been outstanding since January 1, 2013.
3.		Authorized stock is 20,700 shares of preferred, 506,600 shares of common with a $13 par value.
4.		The January 1 balance in Retained Earnings was $1,131,000.
5.		On July 1, 21,200 shares of common stock were issued for cash at $17 per share.
6.		On September 1, the company discovered an understatement error of $90,100 in computing depreciation in 2013. The net of tax effect of $63,070 was properly debited directly to Retained Earnings.
7.		A cash dividend of $329,290 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2013.
8.		On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $17.
9.		Net income for the year was $558,900.
10.		On December 31, 2014, the directors authorized disclosure of a $201,800 restriction of retained earnings for plant expansion. (Use Note X.)