ArtnMotion Inc specializes in truck tires and had the following ArtnMotion Inc. specializes in truck

 
   

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ArtnMotion Inc specializes in truck tires and had the following
ArtnMotion Inc. specializes in truck tires and had the following shareholders’ equity on January 1, 2017:

Preferred shares, $2.50, convertible to common on a 2-for-1 basis, 100,000

shares authorized, 50,000 shares issued and outstanding …………………….. $1,500,000

Common shares, unlimited number of shares authorized, 150,000 shares

issued and outstanding ………………………………………………………… 1,500,000

Total contributed capital ………………………………………………………. 3,000,000

Retained earnings ………………………………………………………………. 1,200,000

Total shareholders’ equity ……………………………………………………… $4,200,000

The following information is available for the year ending December 31, 2017:

Feb. 1 Declared a cash dividend of $275,000, payable on March 1 to the shareholders of record on February 15. Indicate the amount payable to each class of shareholder.

Mar. 1 Paid the cash dividend declared on February 1.

May 2 Declared a 20 percent stock dividend on the common shares, distributable on July 4 to the shareholders of record on June 15. The market value of the shares was $11.00 per share.

Jul. 4 Distributed the common shares dividend declared on May 2.

Aug. 8 The Company discovered that amortization expense recorded in 2015 was understated in error by $30,000. (Ignore any tax consequences.) Dec. 31 ArtnMotion Inc.’s records show the following:

Sales for the year……………………………………………………….. $3,150,000

Cost of goods sold…………………………………………………….. 1,290,000

Operating expenses…………………………………………………… 792,000

Income from discontinued operations………………………. 132,000

Loss on sale of discontinued operations……………………. 76,000

Close only the Income Summary account, assuming the company pays taxes at the rate of 35 percent.

Required

1. Record the transactions in the general journal. Explanations are not required.

2. Prepare a combined statement of income and retained earnings for the year ended December 31, 2017. Include earnings per share information. For purposes of the earnings per share calculation, the weighted average number of common shares is 180,000.

ArtnMotion Inc specializes in truck tires and had the following