The ledger of Waite at December 31, 2022, after the books have been closed, contains the following stockholders’ equity accounts.
Preferred Stock (10,000 shares issued)……………..$1,000,000
Common Stock (300,000 shares issued)……………..1,500,000
Paid-in Capital in Excess of Par Value—Preferred Stock ……………..200,000
Paid-in Capital in Excess of Stated Value—Common Stock ……………..1,600,000
Retained Earnings……………..2,860,000
A review of the accounting records reveals this information:
1. Preferred stock is 8%, $100 par value, noncumulative. Since January 1, 2021, 10,000 shares have been outstanding; 20,000 shares are authorized.
2. is no-par with a stated value of $5 per share; 600,000 shares are authorized.
3. The January 1, 2022, balance in Retained Earnings was $2,380,000.
4. On October 1, 60,000 shares of were sold for cash at $9 per share.
5. A cash of $400,000 was declared and properly allocated to preferred and on November 1. No dividends were paid to preferred stockholders in 2021.
6. Net income for the year was $880,000.
7. On December 31, 2022, the directors authorized disclosure of a $160,000 restriction of retained earnings for plant expansion.
Instructions
a. Reproduce the Retained Earnings account (T-account) for the year.
b. Prepare the stockholders’ equity section of the at December 31.
