North Wind Aviation received its charter during January 2013. The charter author

Question

North Wind Aviation received its charter during January 2013. The charter authorized the following capital stock: Preferred Stock, 8 percent, par $10, 20,000 shares and Common Stock, par $1, authorized 50,000 shares. During 2013, the following transactions occurred in the order given:

a. Issued a total of 40,000 shares of the common stock to the company’s
    founders for $15 per share.

b. Issued 10,000 shares of the preferred stock at $16 per share.

c. Issued 3,000 shares of the common stock at $20 per share and 1,000
    shares of the preferred stock at $16.

d. Net income for the first year was $48,000.

Required:

Prepare the stockholders’ equity section of the balance sheet at December 31, 2013.

Explanation / Answer

North Wind Aviation Stockholders’ Equity 31-Dec-13 Contributed Capital:     Preferred Stock, 8%, $10 par, 20,000 shares authorized, 11,000 shares issued and outstanding 110000     Additional Paid-in Capital, Preferred 66000     Common Stock, $1 par, 50,000 shares authorized,         43,000 shares issued and outstanding 43000     Additional Paid-in Capital, Common 617000         Total Contributed Capital 836000     Retained Earnings 48000         Total Stockholders’ Equity 884000

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