Question

Shown below is the stockholders’ equity section of Powell’sbalance sheet at December 31, 2010:

Stockholders’equity:

Common stock, $2 par value, 500,000 shares authorized,

?? sharesissued........................................................................ $ 500,000

Additional paid‑in capital: commonstock................................................ 1,750,000

Total paid-incapital........................................................................... $2,250,000

Retainedearnings..................................................................................... 2,400,000

Total stockholders’equity........................................................................ $4,650,000

In 2011, thefollowing events occurred:

Powell issued 2,500 shares of $2 par common stockas payment for legal services. Although Powell’s stock is nottraded on any exchange, the agreed-upon value of the legal servicesis $80,000.

Powell issued 4,500 shares of 6% cumulativepreferred stock, $100 par value, for $106 per share.

The board of directors declared a dividend of$1.25 per share on the common stock.

Powell’s net income for 2011 was $675,000.

Instructions

Complete in goodform the stockholders’ equity section of a balance sheet preparedfor Powell at December 31, 2011.

Stockholders’ equity:
6% cumulative preferred stock, $100 par value, 10,000 shares authorized, 4,500 shares issued	$
Total paid‑incapital	$
Total stockholders’ equity

Use this space to calculate endingRetained Earnings, Dec 31 (hint: remember the Retained EarningsStatement format or think about the T-account approach

Beginning retained earnings	$
Add:
Less:
Retained earnings, Dec. 31, 2011	$