Quick Fix-it Corporation was organized in January 2014 to operate several car re

Question

Quick Fix-it Corporation was organized in January 2014 to operate several car repair businesses in a large metropolitan area. The charter issued by the state authorized the following capital stock: Common stock, $13 par value, 98,200 shares Preferred stock, $40 par value, 8 percent, 60,600 shares During January and February 2014, the following stock transactions were completed: a. Sold 78,300 shares of common stock at $26 per share and collected cash. b. Sold 21,800 shares of preferred stock at $61 per share; collected the cash and immediately issued the stock. c. Bought 4,300 shares of common stock from a current stockholder for $20 per share. Required: Net income for 2014 was $91,700; cash dividends declared and paid at year-end were $30,900. 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

Notes:

1. Preferred stock is shown at 21,800*40

2. Common stokc @78,300*13

3. Retained earnings @ 91,700-30,900

4. Treasury stokc @ 4,300*20

5. Additional paid in capital:

Preferred stokc = 21,800*(61-40)

Common stock = 78,300*(26-13)

Stock holders' equity section of the Balance sheet Preferred stock $40 par value, 60,600 shares authorised, 21,800 Issued and Outstanding          872,000 Common Stock $13 par value, 98,200 shares authorised, 78,300 Issued and 74,000 Outstanding      1,017,900 Additional Paid in Capital      1,475,700 Retained Earnings            60,800 Less: Treasury Stock          (86,000) Total Stockholder's equity      3,340,400

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