Common Stock Transactions and Stockholders Equity
On March 1, 2010, Blank Company began operation with a corporate charter authorizing 50,000 shares of $4 par value common stock.
Over the company completed the following transactions:
March 1 Sold 15,000 shares of its common stock for $100,000.
Paid expenses incurred to obtain the charter and starting up and organizing the corporation $10,000.
April 10 Sold 6,500 shares of common stock for $65,000
15 Purchased 2,500 shares of Common Stock for $25,000.
May 31 The board of directors declared a $0.20 per share cash dividend to be paid on June 15 to shareholders of record on June 10.
1) Record the above transactions in T accounts.
2) Prepare the stockholders' equity section of Blank Company's balance sheet at May 31, 2010. Net Income earned during the first three months was $15,000.
3) What effect, if any will Blank Company's cash dividend declaration on May 31 have on its net income, retained earnings and cash flows?