The December 31, 2018 Balance Sheet of Company ABC is provided on the attached Excel document.

Requirements

• Prepare the Equity section of the Balance Sheet as of December 31, 2019, December 31, 2020, and December 31, 2021.
• Prepare the Statement of Shareholder’s Equity for the periods ending December 31, 2019, December 31, 2020, and December 31, 2021.
• Prepare the EPS section of the Income Statement for the periods ending December 31, 2019, December 31, 2020, and December 31, 2021.
• With the exception of EPS, all values should be rounded to whole dollars. Negative numbers should be shown in parentheses.
• Use the provided formats in the attached Excel document to present your solutions.
• Net Income 2019: $450,000
• Net Income 2020: $830,000
• Net Income 2021: $1,215,000
• Income tax rate: 21%
• Average common share market price
  • 2018: $40
  • 2019: $35
  • 2020: $29
  • 2021: $23
• On 1/1/2020 ABC issued $2,500,000 in face-value 5% convertible bonds. Each $25 bond is convertible into 1 share of common stock. The bonds remained outstanding as of 12/31/2021
• In 2018 ABC granted executive stock options exercisable after 12/31/2019 for 75,000 common shares at an exercise price of $45 per share. The options expire 12/31/2020.
• In 2020 ABC granted executive stock options exercisable after 12/31/2020 for 75,000 common shares at an exercise price of $20 per share. The options expire 12/31/2022.

Details of ABC’s equity transactions for 2019, 2020, and 2021.

1/1/2019 ABC issues 50,000 shares of the 6.5%, cumulative, non-participating preferred stock in exchange for cash at an average price of $80 per share.

4/1/2019 ABC reacquires 50,000 common shares as Treasury stock at a price of $30 per share.

11/15/2019 The Board of Directors authorizes cash dividends of $325,000 to be paid 12/30/2019.

6/1/2020 ABC sells the 50,000 shares of Treasury stock for $37 per share.

7/1/2020 The Board of Directors authorizes a 2-for-1 stock split effected in the form of a 100% stock dividend on common shares. The market value of the $10 par common stock at the time of the split is $40 per share.

11/15/2020 The Board of Directors authorizes cash dividends of $750,000 to be paid on 12/30/2020.

5/1/2021 ABC reacquires and retires 100,000 common shares for $26 per share.

12/31/2021 The Board of Directors authorizes cash dividends of $800,000.

Additional Relevant Information

Additional Relevant Information

• Net Income 2019: $450,000
• Net Income 2020: $830,000
• Net Income 2021: $1,215,000
• Income tax rate: 21%
• Average common share market price
  • 2018: $40
  • 2019: $35
  • 2020: $29
  • 2021: $23
• On 1/1/2020 ABC issued $2,500,000 in face-value 5% convertible bonds. Each $25 bond is convertible into 1 share of common stock. The bonds remained outstanding as of 12/31/2021
• In 2018 ABC granted executive stock options exercisable after 12/31/2019 for 75,000 common shares at an exercise price of $45 per share. The options expire 12/31/2020.
• In 2020 ABC granted executive stock options exercisable after 12/31/2020 for 75,000 common shares at an exercise price of $20 per share. The options expire 12/31/2022.