Question Details

Lundy Corporation had Retained Earnings 



Ex. 1
Tortola Company reported the following balances at December 31, 2013: common stock $500,000; paid-in capital in excess of par value $100,000; retained earnings $250,000. During 2014, the following transactions affected stockholders’ equity.

1.	Issued preferred stock with a par value of $150,000 for $200,000.
2.	Purchased treasury stock (common) for $40,000.
3.	Earned net income of $140,000.
4.	Declared and paid cash dividends of $75,000.
Instructions
Prepare the stockholders' equity section of Tortola Company's December 31, 2014, balance sheet.

Ex. 2
On January 1, 2014, Lundy Corporation had Retained Earnings of $400,000. During the year, Lundy had the following selected transactions:
1.	Declared stock dividends of $50,000.
2.	Declared cash dividends of $90,000.
3.	A 2 for 1 stock split involving the issuance of 200,000 shares of $5 par value common stock for 100,000 shares of $10 par value common stock.
4.	Suffered a net loss of $70,000.
5.	Corrected understatement of 2013 net income because of an inventory error of $48,000.
Instructions
Prepare a retained earnings statement for the year.




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