Chapter 11, Problem 11.9E

Determining the Effects of Transactions on Stockholders’ Equity

Quick Fix-It Corporation was organized at the beginning of this year to operate several car repair businesses in a large metropolitan area. The charter issued by the slate authorized the following stock:

Common stock, $10 par value, 98,000 shares authorized

Preferred stock, $50 par value, 8 percent, 59,000 shares authorized

During January and February of this year, the following stock transactions were completed:

1. a. Sold 78,000 shares of common stock at $20 cash per share.
2. b. Sold 20,000 shares of preferred stock at $80 cash per share.
3. c. Bought 4,000 shares of common stock from a current stockholder for $20 cash per share.

Required:

Net income for the year was $210,000; cash dividends declared and paid at year-end were $50,000. Prepare the stockholders’ equity section of the balance sheet at the end of the year.