Accounting -Corporate Dividends The stockholders’ equity section of Karp Company

| January 30, 2017

Question
Name_____________________________
Corporate Dividends
The stockholders’ equity section of Karp Company at January 1, 2016 follows:
Preferred Stock, 6%, $50 par $600,000
Common Stock, $5 par $800,000
Paid in Capital in excess of Par-Preferred $200,000
Paid in Capital in excess of Par-Common $300,000
Retained Earnings $800,000
There were $30,000 of preferred dividends in arrears on January 1, 2016.
During 2016, the company had the following transactions and events:
1-Jul Declared $50,000 of cash dividends to shareholders.
1-Aug Discovered a $100,000 understatement of 2015 depreciation on equipment
(ignore income taxes)
1-Sep Paid the cash dividend declared on July 1
15-Sep Announced a 2 for 1 common stock split when the market price was $38
1-Oct Purchased 10,000 shares of common for the treasury at $20 per share
1-Dec Declared a 10% stock dividend on the common stock when the market
price was $18 per share.
15-Dec Distributed the stock dividend declared on December 1.
31-Dec Closed the net income for 2016 of $550,000
Journalize the above transactions and events.
Prepare a proper Stockholders’ Equity Statement at December 31, 2016:

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