Following Is the Shareholders' Equity Section of the Balance Sheet

question 127

Essay

Following is the shareholders' equity section of the balance sheet of Downing Corporation as of November 1,2017:
$\begin{array}{lr}\text {Preferred shares, \( \$ 3 \), noncumulative, 10,000 shares}\\\text {authorized, 6,500 shares issued}&\$ 325,000 \\\text {Common shares, 300,000 shares authorized,}\\120,000 \text { shares issued } & \underline{1,620,000} \\\text { Total contributed capital } & 1,945,000 \\\text { Retained earnings } & \underline{467,200} \\\text { Total shareholders' equity } & \underline{ \$ 2,412,200}\end{array}$ Downing Corporation reported the following transactions during November,2017:
Nov. 1 $\quad$ Declared the required annual cash dividend on the preferred shares and a $\$ 0.50$ dividend on the common shares.
15 $\quad$ Paid the dividends declared on November 1.
16 $\quad$ Declared a 10\% common stock dividend. The market value of the common shares is $\$ 15.00 \mathrm { per }$ share.
26 $\quad$ Distributed the common stock dividend declared on November 16.
30 $\quad$ The board of directors announced a 2-for-1 stock split. Show the dollar amount of the effect of each transaction on both total contributed capital and total shareholders' equity.
$$\begin{array} { | r | l | l | } \hline \text { Date } & \text { Total Contributed Capital } & \text { Total Shareholders' Equity } \\\hline \text { Nov. } 1 & & \\\hline 15 & & \\\hline 16 & & \\\hline 26 & & \\\hline 30 & & \\\hline\end{array}$$

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Definitions:

Fewer Inputs

Utilizing a smaller amount of resources or factors of production to achieve a particular output.

Specialization

A process wherein individuals or businesses focus on producing a limited range of goods or services to gain greater efficiency and productivity.

Trade

The swapping of goods, services, or both among two or more entities.

Opportunity Cost

The loss incurred from potential opportunities when one choice is made over others.