On January 1, Year 1, the organizers of Fredonia Corporation obtained their charter authorizing 400,000 shares of $2 par common stock. Fredonia issued 30,000 shares of $2 par common stock for $8 per share. During Year 1, the corporation earned $820,000 in cash revenue and paid $700,000 in cash expenses, not including income tax. The company declared and paid cash dividends totaling $28,000. Fredonia Corporation is in the 30% tax bracket. Required:Using the above information, prepare an income statement and a balance sheet for the Fredonia Corporation.
What will be an ideal response?
| Fredonia Corporation | |
| Balance Sheet | |
| As of December 31, Year 1 | |
| ? | ? |
| Assets | ? |
| Cash | $ 296,000 |
| ? | ? |
| Stockholders' Equity | ? |
| Common stock | $ 60,000 |
| Paid-in capital in excess of par value-common | 180,000 |
| Retained earnings | 56,000 |
| Total Stockholders' Equity | $ 296,000 |
| ? | ? |
Common stock = 30,000 shares × Par value of $2 = $60,000
Paid-in capital in excess of par value-common = 30,000 shares × (Issue price of $8 per share ? Par value of $2 per share) = $180,000
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