Specialty Auto Racing Inc. retails racing products for BMWs, Porsches, and Ferra

Question

Specialty Auto Racing Inc. retails racing products for BMWs, Porsches, and Ferraris. The following accounts and their balances appear in the ledger of Specialty Auto Racing Inc. on July 31, the end of the current year: 1 Common Stock, $36 par $10,080,000.00 2 Paid-In Capital from Sale of Treasury Stock-Common 340,000.00 3 Paid-In Capital in Excess of Par-Common Stock 420,000.00 4 Paid-In Capital in Excess of Par-Preferred Stock 384,000.00 5 Preferred 1% Stock, $150 par 7,200,000.00 6 Retained Earnings 71,684,000.00 7 Treasury Stock-Common 1,008,000.00 Fifty thousand shares of preferred and 300,000 shares of common stock are authorized. There are 24,000 shares of common stock held as treasury stock . Prepare the Stockholders’ Equity section of the balance sheet as of July 31, the end of the current year using Method 1 of Exhibit 7. Refer to the lists of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Deduct” will automatically appear if required.

Explanation / Answer

Stockholders’ Equity Paid In capital Shares Issued 7,200,000 Excess of is 384,000 7,584,000 Stockdividends 420,000 issued common stock 10,080,000 10,500,000 Treasury Stock 340,000 Paid In Capital 10,840,000 Retained Earnings 71,684,000 Tottal 82,524,000 Treasury - common 1,008,000 Total stockholder's equity 83,532,000

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