Comprehensive
Response to the following problem:
Min Co. is a publicly held company whose shares are traded in the overthe-counter market. The stockholders' equity accounts at December 31, 2009 had the following balances:
Preferred stock, $100 par value 6% cumulative; 5,000 shares
authorized; 2,000 issued and outstanding $ 200,000
Common stock, $I par value 150,000 shares authorized;
100,000 issued and outstanding 100,000
Additional paid-in capital 800,000
Retained earnings 1,586 000
Total Stockholders' Equity $24686,000
Transactions during 2010 and other information relating to the stockholders' equity accounts were as follows:
• February 2, 2010-Issued 13,000 shares of common stock to Ram Co. in exchange for land. On the date issued, the stock had a market price of $11 per share. The land had a carrying value on Ram's books of $135,000 and an assessed value for property taxes of $90,000.
• March 2, 2010-Purchased 5,000 shares of its own common stock to be held as treasury stock for $14 per share. Min uses the cost method to account for treasury stock. Transactions in treasury stock are legal in Min's state of incorporation.
• May 11, 2010-Declared a property dividend of marketable securities held by Min to common shareholders. The securities had a carrying value of $600,000; fair value on relevant dates were:
Date of declaration (May 11, 2010) $720,000
Date of record (May 28, 2010) 758,000
Date of distribution (June 4, 2010) 736,000
• October 1, 2010-Reissued 2,000 shares of treasury stock for $16 per share.
• November 2, 2010-Declared a cash dividend of $1.50 per share to all common shareholders of record November 16, 2010. The dividend was paid on November 26, 2010.
• December 21, 2010-Declared the required annual cash dividend on preferred stock for 2010. The dividend was paid on January 4, 2011.
• January 14, 2011-Before closing the accounting records for 2010, Min became aware that no amortization had been recorded for 2009 for a patent purchased on July 1, 2009. The patent was properly capitalized at $320,000 and had an estimated useful life of eight years when purchased. Min's income tax rate is 30%. The appropriate correcting entry was recorded on the same day.
• Adjusted net income for 2010 was $838,000.
Required
Determine the amounts of each of the following items. Show supporting calculations.
1. Prior period adjustment
2. Preferred dividends
3. Common dividends-cash
4. Common dividends-property
5. Number of common shares issued at December 31, 2010
6. Total legal capital of common stock issued
7. Additional paid-in capital, including treasury stock transactions
8. Total dollar amount of treasury stock
9. Numerator used in calculation of 2010 earnings per share for the year.