8 9.00 points E11-4 Reporting the Stockholders\' Equity Section of the Balance S

Question

8 9.00 points E11-4 Reporting the Stockholders' Equity Section of the Balance Sheet LO 11-2, LO 11-3, LO 11-4)] Shelby Corporation was organized in January to operate an air-conditioning sales and service business The charter issued by the state authorized the following capital stock: Common stock, $1 par value, 200,000 shares Preferred stock, $10 par value, 6 percent, 50,000 shares During January and February, the following stock transactions were completed a. Collected $400,000 cash and issued 20,000 shares of common stock b. Issued 15,000 shares of preferred stock at $30 per share; collected in cash Net income for the year was $50,000; cash dividends declared and paid at year-end were $10,000 Required Prepare the stockholders' equity section of the balance sheet at December 31 Answer is complete but not entirely correct. SHELBY CORPORATION Balance Sheet (Partial) At December 31 Stockholders' Equity Contributed Capital Preferred Stock Additional Paid-in Capital. Preferred Stock 132,000 Common Stock Additional Paid-in Capital, Common Stock 132,000 110,000 12,000 Total Contributed Capital Retained Earnings 386,000 32,000 Total Stockholders' Equity 418,000

Explanation / Answer

Contributed capital: Preferred stock 150000 =15000*10 Additional paid in capital-Preferred stock 300000 =15000*(30-10) Common Stock 20000 Additional paid in capital-Common stock 380000 =400000-20000 Total Contributed capital 850000 Retained earnings 40000 =50000-10000 Total stockholders' equity 890000

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