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North Wind Aviation received its charter during January authorizing the followin

ID: 2560739 • Letter: N

Question

North Wind Aviation received its charter during January authorizing the following capital stock: Preferred stock: 8 percent, par $10, authorized 20,000 shares. Common stock: par $1, authorized 60,000 shares. The following transactions occurred during the first year of operations in the order given: a. Issued a total of 50,000 shares of the common stock for $10 per share. b. Issued 11,000 shares of the preferred stock at $11 per share. c. Issued 4,000 shares of the common stock at $15 per share and 1,100 shares of the preferred stock at $11. d. Net income for the first year was $58,000. Required Prepare the stockholders' equity section of the balance sheet at December 31. NORTH WIND AVIATION Balance Sheet (Partial) At December 31 Stockholders' Equity Contributed Capital Total Contributed Capital Total Stockholders' Equity

Explanation / Answer

Answer:

North Wind Aviation

Balance sheet (partial)

Stockholders' equity section of the balance sheet at
December 31,

Contributed Capital:

     Preferred Stock

121000

     Additional Paid-in Capital - Preferred Stock

12100

     Common Stock

54,000

     Additional Paid-in Capital - Common Stock

506000

Total contributed capital

693,100

Retained Earnings

58000

Total stockholders' equity

751,100

Working Notes:

Additional paid in capital - Common stock

= (50,000 x $9) + (4,000 x $14)

= 506,000

Additional paid in capital - Preffered stock

= (11,000 x $1) + (1,100 x $1)

= $12100

North Wind Aviation

Balance sheet (partial)

Stockholders' equity section of the balance sheet at
December 31,

Contributed Capital:

     Preferred Stock

121000

     Additional Paid-in Capital - Preferred Stock

12100

     Common Stock

54,000

     Additional Paid-in Capital - Common Stock

506000

Total contributed capital

693,100

Retained Earnings

58000

Total stockholders' equity

751,100

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