Dakota Corporation had the following shareholders’ equity account balances at December 31, 2018: Preferred Stock $1,800,00 Additional Paid - in capital on preferred stock 90000 Common Stock 5,150,000 Additional paid in capital on common stock 3500000 Retained Earnings 4000000 Unrealized decrease in value of marketable equity securities 245000 Treasury common stock 270000 Transactions during 2019 and other information relating to the shareholders’ equityaccounts were as follows:1. Dakota’s preferred and common shares are traded on the over-the-counter market. At December 31, 2018, Dakota had 100,000 authorized shares of $100 par, 10%, cumulative preferred stock; and 3,000,000 authorized shares of no-parcommon stock with a stared value of $5 per share.2. On January 9, 2019, Dakota formally retired all 30,000 shares of its treasurycommon stock and had them revert to an unissued basis. The treasury stock hadbeen acquired on January 20, 2018. The shares were originally issued at $10 pershare.3. Dakota owned 10,000 shares of Bush Inc. common stock purchased in 2016 for$750,000. The Bush stock was included in Dakota’s short-term marketable securitiesportfolio at the end of 2018 at a value of $650, 000. On February 13, 2019, Dakotadeclared a dividend in kind of 1 share of Bush for every 100 shares of Dakotacommon stock held by shareholders of record on February 27, 2019. The marketprice of Bush common stock was $63 per share on February 13, 2019. The dividendin kind was distributed on March 12, 2019.4. On April 2, 2019, 250,000 stock rights were issued to the common shareholderspermitting the purchase of 1 new share of common stock in exchange for 1 right and$11 cash. On April 23, 2019, 210,000 stock rights were exercised when the marketprice of Dakota’s common stock was $13 per share. Dakota issued new shares tosettle the transaction. The remaining 40,000 rights were not exercised and expired.5. On December 10, 2019, Dakota declared the yearly cash dividend on preferredstock, payable on January 14, 2017, to shareholders of record on December 31, 2019.6. Alter the year-end adjustment, the Unrealized Decrease in Value of MarketableEquity Securities account had a debit balance of $135,000 at December 31, 2019. 7. On January 14, 2020, before the accounting records were closed for 2019, Dakotabecame aware that rent income for the year ended December 31, 2018, wasoverstated by $500,000. The after-tax effect on 2018 net income was $275,000. Theappropriate correcting entry was recorded the same day.8. After correcting the rent income, net income for 2019 was $2,600,000.Required:1. Prepare Dakota’s statement of retained earnings for the year ended December 31, 2019. Assume that only single-period financial statements for 2019 are presented.2. Prepare the shareholders’ equity section of Dakota’s balance sheet at December 31, 2019.
Dakota Corporation had the following shareholders’ equity account balances at December 31, 2018:
| $1,800,00 | |
| Additional Paid - in capital on preferred stock | 90000 |
| Common Stock | 5,150,000 |
| Additional paid in capital on common stock | 3500000 |
| 4000000 | |
| Unrealized decrease in value of marketable equity securities | 245000 |
| Treasury common stock | 270000 |
Transactions during 2019 and other information relating to the shareholders’ equity
accounts were as follows:
1. Dakota’s preferred and common shares are traded on the over-the-counter
market. At December 31, 2018, Dakota had 100,000 authorized shares of $100 par,
10%, cumulative preferred stock; and 3,000,000 authorized shares of no-par
common stock with a stared value of $5 per share.
2. On January 9, 2019, Dakota formally retired all 30,000 shares of its treasury
common stock and had them revert to an unissued basis. The
been acquired on January 20, 2018. The shares were originally issued at $10 per
share.
3. Dakota owned 10,000 shares of Bush Inc. common stock purchased in 2016 for
$750,000. The Bush stock was included in Dakota’s short-term marketable securities
portfolio at the end of 2018 at a value of $650, 000. On February 13, 2019, Dakota
declared a dividend in kind of 1 share of Bush for every 100 shares of Dakota
common stock held by shareholders of record on February 27, 2019. The market
price of Bush common stock was $63 per share on February 13, 2019. The dividend
in kind was distributed on March 12, 2019.
4. On April 2, 2019, 250,000 stock rights were issued to the common shareholders
permitting the purchase of 1 new share of common stock in exchange for 1 right and
$11 cash. On April 23, 2019, 210,000 stock rights were exercised when the market
price of Dakota’s common stock was $13 per share. Dakota issued new shares to
settle the transaction. The remaining 40,000 rights were not exercised and expired.
5. On December 10, 2019, Dakota declared the yearly cash dividend on preferred
stock, payable on January 14, 2017, to shareholders of record on December 31, 2019.
6. Alter the year-end adjustment, the Unrealized Decrease in Value of Marketable
Equity Securities account had a debit balance of $135,000 at December 31, 2019.
7. On January 14, 2020, before the accounting records were closed for 2019, Dakota
became aware that rent income for the year ended December 31, 2018, was
overstated by $500,000. The after-tax effect on 2018 net income was $275,000. The
appropriate correcting entry was recorded the same day.
8. After correcting the rent income, net income for 2019 was $2,600,000.
Required:
1. Prepare Dakota’s statement of retained earnings for the year ended December 31, 2019. Assume that only single-period financial statements for 2019 are presented.
2. Prepare the shareholders’ equity section of Dakota’s balance sheet at December 31, 2019.
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