Quick Fix-It Corporation was organized at the beginning of this year to operate several car repair businesses in a large metropolitan area. The charter issued by the state authorized the following stock:

Quick Fix-It Corporation was organized at the beginning of this year to operate several car repair businesses in a large metropolitan area. The charter issued by the state authorized the following stock:

Common stock, $14 par value, 98,500 shares authorized

Preferred stock, $46 par value, 8 percent, 59,900 shares authorized
 

During January and February of this year, the following stock transactions were completed:

a. Sold 78,300 shares of common stock at $28 cash per share.

b. Sold 20,800 shares of preferred stock at $63 cash per share.

c. Bought 5,800 shares of common stock from a current stockholder for $11 cash per share.

Required:

Net income for the year was $90,300; cash dividends declared and paid at year-end were $30,800. Prepare the stockholders' equity section of the balance sheet at the end of the year.

 

Explanation:

Preferred stock, 8%, par $46, authorized 59,900 shares, issued and outstanding, 20,800 shares = $956,800

Common stock, par $14, authorized 98,500 shares, issued, 78,300 shares = $1,096,200

Retained earnings = ($90,300 − $30,800 = $59,500.)

Treasury stock = $11 × 5,800 shares