North Wind Aviation received its charter during January authorizing the followin

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: Issued a total of 50,000 shares of the common stock for $10 per share. Issued 11,000 shares of the preferred stock at $11 per share. Issued 4,000 shares of the common stock at $15 per share and 1,100 shares of the preferred stock at $11. Net income for the first year was $58,000. Required: Prepare the stockholders' equity section of the balance sheet at December 31.

Explanation / Answer

North Wind Aviation Stockholders Equity Preferred Stock 121000 Additional Paid in Capital- Preferred stock 12100 Common Stock 540000 Additional paid in capital- Common Stock 20000 Total Capital 693100 Retained Earnings 58000 Total 751100 Preferred Stock 11000*10 110000 1100*10 11000 Total 121000 Additional Paid in Capital- Preferred stock 11000*1 11000 1100*1 1100 Total 12100 Common Stock 50000*10 500000 4000*10 40000 Total 540000 Additional paid in capital- Common Stock 4000*5 20000

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