Crea ing a stockholder\'s equity section ofthe balance sheet: Ange s, lnc. was a
ID: 2388221 • Letter: C
Question
Crea ing a stockholder's equity section ofthe balance sheet:Ange s, lnc. was authorized to issue 1,000,000 shares of common stock with a par value of $1 per share.
On J nuary 1, 2011, they sold 500,000 shares for $10 a share.
They were also authorized to issue 200,000 shares of 7% preferred stock with a par value of $100. On
Janu 1,2011, they sold 100,000 shares of preferred stock for $100 a share.
Duri g 2011, they had net income of $1,000,000 and paid $700,000 out in dividends. At December 31,
2011: the common stock was trading for $11 a share and the preferred stock was trading for $101 a share.
Pleas prepare the stockholders' equity section of the balance sheet. (Some of the above information is
relev: nt to this task and some is not.)
Explanation / Answer
Stockholders’ equity section on 31 Dec 2011 Common stock—$1 par value, 1,000,000 shares authorized, 500,000 shares issued and outstanding . . . . . . . . . . . $ 500,000 Contributed capital in excess of par value, common stock . . . . . . $ 4,500,000 Preferred stock, $100 par, 7%, 200,000 shares authorized, 100,000 shares issued and outstanding .................................$10,000,000 Total contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000,000 Retained earnings ($1,000,000-700,000). . . . . . . . . . . . . . . . . . .$300,000 Total stockholders’ equity 31 Dec 2011 . . . . . . . . . . . . . . . . . . $15,300,000