Pearson Wood Supplies started 2012 with 30,000 1 common shares, paid in capital exceeding $25,000, and retained earnings totaling $175,000. In 2012, Pearson Wood Supplies earned $22,000 in net income.
Pearson sold 10,000 shares at $10 per share of its $1 par stock in January. A cash dividend was declared by Pearson on January 6 for 5,000 shares (4,0 par) of preferred stock. The $0.20 per share dividend was also given on the remaining 40,000 common stock shares. The record date was January 15, and payment on January 20.
Company declared a 2-for-1 stock splitting in March. The company called in 40,000 shares at $1 each and then issued new stock. Pearson distributed a 10% stock dividend to the common stock in April when its market value was $12.
For $13 per share, 1,000 shares were purchased by the company in common stock. Pearson purchased 500 treasury shares in December for $15 per share.
It is important to note that these transactions will impact the company’s balance sheet, income statement and retained earnings statement. In order to accurately reflect the changes in financial position and performance, you’ll need to adjust the financial statements accordingly.