Witt Corporation received its charter during January 2014. The charter authorize

Question

Witt Corporation received its charter during January 2014. The charter authorized the following capital stock: Preferred stock: 10 percent, par $13, authorized 22,000 shares Common stock: par $11, authorized 51,800 shares. During 2014, the following transactions occurred in the order given: a. Issued a total of 38,400 shares of the common stock to the four organizers at $15 per share. b. Sold 7,300 shares of the preferred stock at $19 per share. c. Sold 4,100 shares of the common stock at $18 per share and 1,100 shares of the preferred stock at $29. d. Net income for the year was $56,000. Required: Prepare the Stockholders’ Equity section of the balance sheet at December 31, 2014. (Amounts to be deducted should be indicated with a minus sign.)

Explanation / Answer

Common stock Issued = (Credited with par value) = 38400 shares * 11 = $ 422,400

Additional paid in capital -common stock = 38400 * (15-11) = 38400 *4 = $ 153,600

Preferred stock = 7300 * 13 = $ 94900

Additional paid in capital -preferred stock = 7300 * (19 -13) = 7300* 6 =$ 43800

common stock - 4100 *11 = 45100

Additional paid in capital -common stock (18-11 = 7 *4100 ) = $ 28700

Preferred stock - 1100 * 13 =$ 14300

Additional paid in capital -Preferred stock = 1100 * 16 = $ 17600

Common stock issued and outstanding (422400+45100) 467,500 Preferred stock issued and outstanding (9490+14300) 109,200 Additional paid in capital -common stock (153600+28700) 182,300 Additional paid in capital -preferred stock(43800+17600) 61400 Retained earnings 56000 shareholdes equity 876,400

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