Calculate the payout ratio, earnings per share, and return on common stockholders’ equity. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.
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The stockholders’ equity accounts of Indigo Corporation on January 1, 2022, were as follows.
| Preferred Stock (7%, $100 par noncumulative, 10,000 shares authorized) | $600,000 | |
| Common Stock ($4 stated value, 600,000 shares authorized) | 2,000,000 | |
| Paid-in Capital in Excess of Par Value—Preferred Stock | 30,000 | |
| Paid-in Capital in Excess of Stated Value—Common Stock | 960,000 | |
| Retained Earnings | 1,376,000 | |
| Treasury Stock (10,000 common shares) | 80,000 |
During 2022, the corporation had the following transactions and events pertaining to its stockholders’ equity.
| Feb. | 1 | Issued 10,000 shares of common stock for $60,000. | |
| Mar. | 20 | Purchased 2,000 additional shares of common treasury stock at $7 per share. | |
| Oct. | 1 | Declared a 7% cash dividend on preferred stock, payable November 1. | |
| Nov. | 1 | Paid the dividend declared on October 1. | |
| Dec. | 1 | Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022. | |
| Dec. | 31 | Determined that net income for the year was $550,000. Paid the dividend declared on December 1. |
Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.) (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
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Date
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Account Titles and Explanation
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Debit
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Credit
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| choose a transaction date |
enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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| choose a transaction date |
enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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| choose a transaction date |
enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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| choose a transaction date |
enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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| choose a transaction date |
enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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| choose a transaction date |
enter an account title to record net income
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enter a debit amount
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enter a credit amount
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enter an account title to record net income
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enter a debit amount
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enter a credit amount
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(To record net income)
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| choose a transaction date |
enter an account title to close cash dividends
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enter a debit amount
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enter a credit amount
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enter an account title to close cash dividends
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enter a debit amount
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enter a credit amount
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(To close cash dividends)
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| choose a transaction date |
enter an account title to record payment of cash dividends payable
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enter a debit amount
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enter a credit amount
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enter an account title to record payment of cash dividends payable
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enter a debit amount
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enter a credit amount
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(To record payment of cash dividends payable)
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Attempts: 0 of 15 used
Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Post entries in the order of journal entries posted in the previous part. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)
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Preferred Stock
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Common Stock
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|||
| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Paid-in Capital in Excess of Par Value—Preferred Stock
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Paid-in Capital in Excess of Stated Value—Common Stock
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Retained Earnings
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| choose a transaction date |
enter a debit amount
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choose the beginning date of the accounting period |
enter a credit balance
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Cash Dividends
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Treasury Stock
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| choose the beginning date of the accounting period |
enter a debit balance
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choose the beginning date of the accounting period |
enter a credit balance
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| choose a transaction date |
enter a debit amount
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choose a transaction date |
enter a credit amount
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| choose the end date of the accounting period |
enter a debit balance
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choose the end date of the accounting period |
enter a credit balance
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Attempts: 0 of 15 used
Prepare the stockholders’ equity section of the balance sheet at December 31, 2022.
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INDIGO CORPORATION
Partial Balance Sheet choose the accounting period |
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| select an opening section name | ||||||
| select an opening subsection name | ||||||
| select a name of the subordinate part one of this subsection | ||||||
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enter a balance sheet item
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$enter a dollar amount
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enter a balance sheet item
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enter a dollar amount
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| select a summarizing line for the subordinate part one of this subsection |
$enter a subtotal of the two previous amounts
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| select a name of the subordinate part two of this subsection | ||||||
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enter a balance sheet item
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enter a dollar amount
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enter a balance sheet item
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enter a dollar amount
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| select a summarizing line for the subordinate part two of this subsection |
enter a subtotal of the two previous amounts
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| select a closing subsection name |
enter a total amount for this subsection
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enter a balance sheet item
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enter a dollar amount
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| select a summarizing line for this part of the statement |
enter a subtotal amount for this part of the statement
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select between addition and deduction: enter a balance sheet item
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enter a dollar amount
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| select a closing section name |
$enter a total amount for this section
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Attempts: 0 of 15 used
Calculate the payout ratio, earnings per share, and return on common stockholders’ equity. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.) (Round answers to 2 decimal places, e.g 17.50%.)
| Payout ratio |
enter payout ratio in percentages rounded to 1 decimal place
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% | |
| Earnings per share |
$enter earnings per share in dollars rounded to 2 decimal places
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| Return on common stockholders’ equity |
enter return on common stockholders’ equity ratio in percentages rounded to 1 decimal place
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% |
Attempts: 0 of 15 used
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