Witt Corporation received its charter during January of this

Witt Corporation received its charter during January of this year. The charter authorized the following stock: Preferred stock: 10 percent, $13 par value, 22,400 shares authorized Common stock: $11 par value, 50,900 shares authorized During the year, the following transactions occurred in the order given: a. Issued a total of 39,000 shares of the common stock at $15 cash per share. b. Sold 6,800 shares of the preferred stock at $19 cash per share. c. Sold 4,100 shares of the common stock at $18 cash per share and 1,200 shares of the preferred stock at $29 cash per share. d. Net income for the year was $51,000. Required: Prepare the stockholders\' equity section of the balance sheet at the end of the year. Use exact numbers please

Solution

Witt Corporation

STOCKHOLDERS EQUITY

Contributed Capital:

A. Preferred Stock 10%, $13 par value 22400 shares authorised, out of which 8000 shares issued and outstanding (Refer Note 1 )

E. Retained Earnings (Refer Note 5)

Total Stockholders Equity (A+B+C+D+E)

$51000

$873,800

Note 1:- Preferred stock = 8000 shares × $13 par value = $ 104,000

Note 2:- Common stock = 43100 shares × $11 par value = $ 474,100

Note 3:- Additional paid in capital, preferred stock = (6800 × $19) + (1200 × $29) - (8000 × $13) = $60,000

Note 4:- Additional paid-in-capital, common stock = (39000 × $15) + (4100 × $18) - (43100 × $11) = $184,700

Note 5:- Retained Earnings = $0 beginning balance + $51000 Net Income - $0 Dividends = $51,000 Ending balance