Question

Shelby Corporation was organized in January to operate an air-conditioning sales and service business. The charter issued by the state authorized the following capital stock: Common stock, $1 par value, 200,000 shares. Preferred stock, $10 par value, 6 percent, 50,000 shares. During January and February, the following stock transactions were completed: a. Collected $441,000 cash and issued 21,000 shares of common stock. b. Issued 15,500 shares of preferred stock at $31 per share; collected in cash. Net income for the year was $51,000; cash dividends declared and paid at year-end were $11,000. Required: Prepare the stockholders' equity section of the balance sheet at December 31. SHELBY CORPORATION Balance Sheet (Partial) At December 31 Stockholders' Equity Contributed Capital: Total Contributed Capital Total Stockholders' Equity

Answer 1

SHELBY CORPORATION Balance Sheet (Partial) At December 31 Stockholders' Equity Contributed Capital: Common Stock 21,000 (21,000 shares $1) 155,000 (15,500 shares $10) $ Preferred Stock 420,000 ($441,000- $21,000) 325,500 (15,500 shares $21) Paid-in Capital in excess of par Common stock Paid-in Capital in excess of par - Preferred stock Total contributed capital 921,500 Retained Earnings $ 40,000 Total stockholders' equity 961,500 Statement of Retained Earnings Beginning balance Add: Net income $ 51,000 (11,000) Less: Dividends Ending balance 40,000