Quick fix-it corporation was organized in January 2011 to operate severl car rep

Question

Quick fix-it corporation was organized in January 2011 to operate severl car repair businesses in a large metropolitan area. The charter issued by state authorized the following capital stock:

Common stock- $10 par value, 98,000 shares
Preferred stock- $50 par value, 8%, 59,000 shares

During Jan & Feb 2011, the following stock transactions were completed.

a. sold 78,000 shares of common stock at $20 per share and collected cash
b. sold 20,000 shares of preferred stock at $80 per share, collected the cash and immediately issued the stock.
c. bought 4,000 shares of common stock from a current stockholder for $20 per share.

Required:
Net income for 2011 was $90,000; cash divdiends declared and paid at year end were $30,000. Prepare the stockholders equity section of the balance sheet at December 31,2011

* I have tried too do this but the numbers I got seemed way off. Can someone else try this so I can compare. The explaination will really help thanks!

Explanation / Answer

common stockon hand at the beginning 98,000 shares of $10 each out of this 78000 shares are isssued at $20 per share each means issued at a premium of $10 so now the balance shares left over are 20000 shares preferred stock 59000 8% at $50 each out of which 20000 shares are issued at $80 per share means issued at a premium of $30 the balance preferred stock is 39000 shares Balance sheet Liabilities Stockholders funds common stock 78000 shares of $10 each                      $780,000 premium of issue of common stock                                $780,000 preferred stock 20000 shares at $50 each                    $1,000,000 premium on issue of preferred stock                              $600,000 20000*(80-50) Retained earnings Net income          $90000 Less:Dividends     $30000 Retained earnings                                                           $60000

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