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Shadden Panao

The document provides financial statements and supporting schedules for Razor-It Corporation as of December 31, 2020, including a statement of retained earnings, stockholders' equity statement, dividend distribution schedule, earnings per share calculation, book value per share calculation, and common stock transactions throughout 2021. It shows Razor-It had net income of $585,000 for 2020, declared dividends of $650,000, and ended the year with total stockholders' equity of $5,192,000.

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Joebin Corporal Lopez
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64 views

Shadden Panao

The document provides financial statements and supporting schedules for Razor-It Corporation as of December 31, 2020, including a statement of retained earnings, stockholders' equity statement, dividend distribution schedule, earnings per share calculation, book value per share calculation, and common stock transactions throughout 2021. It shows Razor-It had net income of $585,000 for 2020, declared dividends of $650,000, and ended the year with total stockholders' equity of $5,192,000.

Uploaded by

Joebin Corporal Lopez
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Problem 1:

Requirement a.
Razor-It Corporation
Statement of Retained Earnings
December 31, 2020

Retained earnings, January 01


Less: Adjustments for prior period error from
understatement of salaries and wages
Adjusted beginning retained earnings

Add: Net income for 2020 585,000.00


Less: Cash dividend declared and distributed (250,000.00)
Common stock dividend declared (400,000.00)
Retained earnings, December 31

Requirement b.
Razor-It Corporation
Stockholders' Equity
December 31, 2020

Capital stock (note 1) 3,500,000.00


Additional paid in capital (note 2) 650,000.00
Retained earnings (note 3)
Appropriated 200,000.00
Unappropriated 842,000.00 1,042,000.00
Total stockholders' equity 5,192,000.00

Note 1- Share capital


Preferred stocks, P50 par, 20,000 shares authorized,
15,000 shares issued 750,000.00
Common stocks, P10 par, 500,000 shares authorized,
250,000 shares issued 2,500,000.00
Common stock dividend distributable 250,000.00
Total share capital 3,500,000.00

Note 2- Additional paid in capital


Paid in capital in excess of par- Preferred stock 250,000.00
Paid in capital in excess of par- Common stock 400,000.00
Total additional paid in capital 650,000.00

Note 3- Retained Earnings


The appropriated portion of retained earnings is restricted for dividend
distribution.
The unappropriated portion or the free retained earnings will be distributed to
stockholders.

Requirement c.

Dividend distribution schedule


Cash Dividends
declared Preferred Common
Balances 250,000.00 0 0
Dividend in arrears- preferred (45,000.00) 45,000.00
Current year dividends:
Preferred (45,000.00) 45,000.00
Common (160,000.00) 160,000.00
Allocation 0 90,000.00 160,000.00

Requirement d.

Earnings per share = Net Income - Preference dividends ÷ No. of common stocks oustanding*
Earnings per share = P585,000 - P90,000 ÷ 275,000 shares
Earnings per share = P495,000 ÷ 275,000 shares
Earnings per share = P1.80

*No. of common shares issued 250,000


No. of common stock dividend 25,000
No. of shares issued and outstanding 275,000

Requirement e.

Total shareholders' equity 5,192,000.00


Less: Par value of preferred stocks 750,000.00
Additional paid in capital 250,000.00
Preferred dividends 90,000.00 (1,090,000.00)
Balance to common stocks 4,102,000.00

Book value per share:


Preferred (P1,090,000÷15,000) 72.67
Common (P4,102,000÷275,000) 14.92
1,170,000.00

(63,000.00)
1,107,000.00

(65,000.00)
1,042,000.00
Problem 2
Common Stock
Paid-in capital in
Item No. of Shares issued Total par value excess of par
Beg. balance- 1/1/2021 400,000 2,000,000.00 850,000.00
Event #1- Jan. 5 20,000 100,000.00 60,000.00
Balance 420,000 2,100,000.00 910,000.00
Event #2- Jan. 16
Balance 420,000 2,100,000.00 910,000.00
Event #3- Feb. 10 30,000 150,000.00 210,000.00
Balance 450,000 2,250,000.00 1,120,000.00
Event #4- Mar. 1 135,000 675,000.00
Balance 585,000 2,925,000.00 1,120,000.00
Event #5- Apr. 1 585,000 0
Balance 1,170,000 2,925,000.00 1,120,000.00
Event #6- Jul. 1 175,500 438,750.00 1,316,250.00
Balance 1,345,500 3,363,750.00 2,436,250.00
Event #7- Aug. 1
Balance 1,345,500 3,363,750.00 2,436,250.00
Retained Earnings
3,000,000.00

3,000,000.00
(84,000.00)
2,916,000.00

2,916,000.00
(675,000.00)
2,241,000.00

2,241,000.00
(1,755,000.00)
486,000.00
(269,100.00)
216,900.00

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