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Trask Corporation Shareholders' Equity Analysis

Trask Corporation had shareholders' equity balances at December 31, 2016 of $7,875,000 in common stock, $16,050,000 in additional paid-in capital, and $16,445,000 in retained earnings. During 2017, Trask issued preferred stock, retired treasury stock, distributed a property dividend of Harbor stock, employees exercised stock options, declared cash and property dividends, and adjusted an understatement of prior year depreciation expense in retained earnings. Trask's retained earnings increased from $16,445,000 at the start of 2017 to $18,540,000 at the end of 2017.

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89 views1 page

Trask Corporation Shareholders' Equity Analysis

Trask Corporation had shareholders' equity balances at December 31, 2016 of $7,875,000 in common stock, $16,050,000 in additional paid-in capital, and $16,445,000 in retained earnings. During 2017, Trask issued preferred stock, retired treasury stock, distributed a property dividend of Harbor stock, employees exercised stock options, declared cash and property dividends, and adjusted an understatement of prior year depreciation expense in retained earnings. Trask's retained earnings increased from $16,445,000 at the start of 2017 to $18,540,000 at the end of 2017.

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trilocksp Singh
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© © All Rights Reserved
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Trask Corporation a public company whose shares are

traded in
Trask Corporation a public company whose shares are traded in

Trask Corporation, a public company whose shares are traded in the over-the-counter
market, had the following shareholders' equity account balances at December 31, 2016:
Common stock.........................................................$ 7,875,000
Additional paid-in capital (including stock options)...............16,050,000
Retained earnings......................................................16,445,000
Treasury common stock...................................................750,000
Transactions during 2017 and other information relating to the shareholders' equity accounts
follow:
? As of January 1, 2017, Trask had 4,000,000 authorized shares of $5 par-value common stock;
it had issued 1,575,000 shares of which 75,000 were held in treasury.
? On January 21, 2017, Trask issued 50,000 shares of $100 par value, 6% cumulative preferred
stock at par in exchange for all of Rover Company's assets and liabilities. On that date, the net
carrying amount of Rover's assets and liabilities equaled their fair values.
? On January 22, 2017, Rover distributed the Trask shares to its stockholders in a complete
liquidation and dissolution of Rover. Trask had 150,000 authorized shares of preferred stock.
? On February 17, 2017, Trask formally retired 25,000 of 75,000 treasury common stock shares.
The shares were originally issued at $15 per share and had been acquired on September 25,
2016, for $10 per share.
? Trask owned 15,000 shares of Harbor Inc. common stock purchased in 2016 for $600,000.
The Harbor stock shares are carried at fair value with price changes included in net income. On
March 5, 2017, Trask declared a property dividend of one share of Harbor common stock for
every 100 shares of Trask common stock held by a shareholder of record on April 16, 2017.
Harbor stock's market price on March 5, 2017, was $60 per share. The property dividend was
distributed on April 29, 2017.
? On January 2, 2012, Trask granted stock options to employees to purchase 200,000 shares of
the company's common stock at $12 per share, which was also the market price on that date.
The options had a grant date fair value of $1.50 per share and are exercisable within a three-
year period, beginning January 2, 2017. On June 1, 2017, employees exercised 150,000
options when the stock's market value was $25 per share. Trask issued new shares to settle the
transaction.
? On December 12, 2017, Trask declared the yearly cash dividend on preferred stock, payable
on January 11, 2018, to shareholders of record on December 31, 2017.
? On January 16, 2018, before the accounting records were closed for 2017, Trask learned that
depreciation expense had been understated by $350,000 for the year ended December 31,
2016. The after-tax effect on 2016 net income was $245,000. The appropriate correcting entry
to adjust January 1, 2017 retained earnings was recorded on the same day. Net income for
2017 was $2,400,000.
Required:
1. Prepare a schedule to show how Trask's retained earnings changed from January 1, 2017, to
December 31, 2017. See the retained earnings column within the Marriott Vacations Worldwide

Unlock answers here solutiondone.online

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