E11-5 (Algo) Reporting Stockholders' Equity and Determining Dividend Policy LO11-1, 11-3, 11-4, 11-7 [The following information applies to the questions displayed below.] Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, $10 par value, 13,400 shares authorized. During the year, the following selected transactions were completed: a. Sold 7,200 shares of common stock for cash at $20 per share. b. Sold 2,900 shares of common stock for cash at $25 per share. c. At year-end, the company reported net income of $7,800. No dividends were declared.

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Required Information [The following information applies to the questions displayed below.] Sun Corporation received a charter that authorized the issuance of 109,000 shares of $5 par common stock and 20,000 shares of $125 par, 8 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation. Year 1 January 5 Sold 16,350 shares of the $5 par common stock for $7 per share. January 12 Sold 2,000 shares of the 8 percent preferred stock for $135 per share. April 5 Sold 21,800 shares of the $5 par common stock for $9 per share. December 31 During the year, earned $302,300 in cash revenue and paid $238,900 for cash operating expenses. December 31 Declared the cash dividend on the outstanding shares of preferred stock for Year 1. The dividend will be paid on February 15 to stockholders of record on January 10, Year 2. December 31 Closed the revenue, expense, and dividend accounts to the retained earnings account. Year 2 February…

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