Question

Lucas incorporated was issued a charter on january 15 of this year, that authorized the following share capital: common shares, no par value, 180,000 shares. preferred shares, $1.50, no par value, 5,800 shares. (note: $1.50 is the dividend rate.) during the year, the following selected transactions occurred: sold and issued 28,000 common shares at $18 cash per share. sold and issued 3,800 preferred shares at $26 cash per share. at the end of the year, the company’s net earnings equalled $48,000. required: 1. prepare the shareholders’ equity section of the statement of financial position at the end of the year.

Answer 1

To prepare the shareholders' equity section for Lucas Incorporated, calculate common and preferred share capital and add retained earnings.

Step-by-step explanation:

The shareholders' equity section of the statement of financial position at the end of the year for Lucas Incorporated can be prepared by calculating the common shares and preferred shares issued and the retained earnings.

1. Common Shares: 180,000 shares authorized, 28,000 shares sold and issued at $18 cash per share. Calculate the common share capital by multiplying the number of shares sold and issued (28,000) by the price per share ($18).
2. Preferred Shares: 5,800 shares authorized, 3,800 shares sold and issued at $26 cash per share. Calculate the preferred share capital by multiplying the number of shares sold and issued (3,800) by the price per share ($26).
3. Retained Earnings: The net earnings at the end of the year ($48,000) are added to the retained earnings balance from previous years.

The total shareholders' equity is the sum of the common share capital, preferred share capital, and retained earnings.