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Taylor Corporation had the following stockholders? equity balances in its general




Question;At the beginning of 2014, Taylor Corporation had the following stockholders? equity balances in its generalledger:Common Stock, $10 Par Value $2,500,000Paid-In Capital in Excess of Par 1,500,000Pain-In Capital, Treasury Stock 450,000Paid-In Capital, Stock Options 200,000Retained Earnings 5,000,000Treasury Stock (15,000 shares) (300,000)Total Stockholders? Equity $9,350,000The paid-in capital from stock options relates to options granted on 1/1/12 to the CEO as incentivecompensation. As of 1/1/14, the remaining expected benefit period is four years, expense has been andwill be recorded evenly over the benefit period.The following events were among the many occurring in 2014:a. January 2: Purchased 5,000 shares of its common stock for $16 per share. Taylor uses the costmethod of accounting for treasury stock transactions.b. February 1: Declared and paid a cash dividend of $2 per share on the outstanding commonstock.c. April 1: Issued 20,000 shares of $50 par, noncumulative, convertible 6% preferred stock for $60per share, where one share of preferred stock is convertible into three shares of common stock.d. July 1: 2,000 shares of treasury stock that had been purchased in a prior year for $21 per sharewere re-issued for $22 per share.e. August 1: Holders of 8,000 shares of the preferred stock converted their shares into commonstock when the market value of the common stock was $22 per share. Taylor uses the book valuemethod of accounting for conversions.f. October 1: Declared and distributed a 1% stock dividend on common stock outstanding when themarket price of the stock was $24 per share.g. November 1: Corrected an error that was made several years ago, when land that had beenpurchased for $100,000 was inadvertently expensed.h. December 1: Declared and distributed a property dividend of land to preferred shareholders. Theland had a fair value of $60,000 and a carrying value of $75,000.i. December 31: Recorded 2014 compensation expense related to the stock options.The 2014 Final Net Income, including the effects of any net income items listed above (and the 2014 taxeffects on net income items), was $1,000,000. There were 500,000 shares authorized for both preferredand common stock.


Paper#38847 | Written in 18-Jul-2015

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