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 authorizedCommon stock: $11 par value, 50,900 shares authorized During the year, the following transactions occurred in the order given: Issued 38,500 shares of the common stock for $15 per share.Sold 5,600 shares of the preferred stock for $19 per share.Sold 4,600 shares of the common stock for $18 per share and 1,900 shares of the preferred stock for $29 per share.Net income for the year was $52,000.Prepare the stockholders' equity section of the balance sheet at the end of the year.

1. Total no. of Common stock issued = 38500+4600 = 43,100 sharesPar value per share = $11 per shareTotal issued capital for common stock = 43100 share x $11 =$474,100 2. Total no. of Preferred stock issue = 5600+1900 = 7500 sharesPar value per share = $13 per shareTotal issued capital for preferred stock = 7500 x $13 = $97,500 3. Premium on common stock = {($15 - $11) x 38500 + ($18 - $11) x 4600] = $186,200 4. Premium on Preferred stock = {($19 - $13) x 5600 + ($29 - $13) x 1900) = $64,000Witt Corporation Balance Sheet (Partial) At December 31 Stockholders' equity Contributed capital : Common Stock $474,100 10% Preferred Stock $97,500 $571,600 Paid-in capital in excess of par - common stock $186,200 Paid-in capital in excess of par - preferred stock $64,000 Total contributed capital $821,800 Retained earning $52,000 Total Stockholders equity $873,800

Answered: Witt Corporation received its charter…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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:

Issued 38,500 shares of the common stock for $15 per share.
Sold 5,600 shares of the preferred stock for $19 per share.
Sold 4,600 shares of the common stock for $18 per share and 1,900 shares of the preferred stock for $29 per share.
Net income for the year was $52,000.

Prepare the stockholders' equity section of the balance sheet at the end of the year.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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