Ava School of Learning obtained a charter at the start of 2010 that authorized 5

Question

Ava School of Learning obtained a charter at the start of 2010 that authorized 55,000 shares of no-par common stock and 21,500 shares of preferred stock, par value $14. During 2010, the following selected transactions occurred:

Prepare the stockholders' equity section of the balance sheet at December 31, 2010. At the end of 2010, the accounts reflected net income of $44,500. No dividends were declared. (Omit the "$" sign in your response.)

Ava School of Learning obtained a charter at the start of 2010 that authorized 55,000 shares of no-par common stock and 21,500 shares of preferred stock, par value $14. During 2010, the following selected transactions occurred:

Explanation / Answer

Ava School of Learning obtained a charter at the start of 2010 that authorized 55,000 shares of no-par common stock and 21,500 shares of preferred stock, par value $14. During 2010, the following selected transactions occurred: a. Collected $36 cash per share from four individuals and issued 5,000 shares of common stock to each. b. Issued 5,000 shares of common stock to an outside investor at $36 cash per share. c. Issued 9,500 shares of preferred stock at $22 cash per share. ddmmyy Cash Dr $720,000 Common Stock Cr 720,000 (Issued No Par common stock of 5000*4*$36) ddmmyy Cash Dr $180,000 Common stock Cr $180,000 (Issued No par stock 5000*$36) ddmmyy Cash Dr 209,000 Pref Stock Cr 133000 Additional paid-in capital-Pref Cr 76000 (Pref STock 9500*$14par = $133,000, Addl Pref cap = ($22-14)*9500 = $76,000) Preferred stock, $14 par (21500 shares authorized, 9500 shares issued & outsrtanding) $133,000 Additional paid-in capital-Pref $76,000 Common stock, No par (55,000 shares authorized, 25,000 shares issued) $900,000 ------------------------------------------------- Total Paid in Capital $1109,000 Retained earnings $44,500 ---------------------------------------- Total Shareholders Equity $1,153,500

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