Specialty Auto Racing Inc. retails racing products for BMWs, Porsches, and Ferraris. The following accounts and their balances appear in the ledger of Specialty Auto Racing on July 31, the end of the current yearCommon stock, $36 par$10,100,00Paid-In Capital from Sale of Treasury Stock—Common340,000Paid-In Capital in Excess of Par—Common Stock420,000Paid-In Capital in Excess of Par—Preferred Stock369,000Preferred 1% Stock, $150 par7,200,000Retained Earnings71,684,000Treasury Stock - Common1,010,000Fifty thousand shares of preferred and 300,000 shares of common stock are authorized. There are 24,000 shares of common stock held as treasury stock. Prepare the Stockholders’ Equity section of the balance sheet as of July 31, the end of the current year, using Method 1 of Exhibit 9 on page 577. EXHIBIT 8Stockholders' Equity Section of a Balance SheetTelex Inc.Balance SheetDecember 31, 20Y7Stockholders' EquityPaid-in capital:Preferred 10% stock, $50 par (2,000 shares authorized andissued).$100,000Excess over par10,000Paid-in capital, preferred stock$ 110,000Common stock, $20 par (50,000 shares authorized,45,000 shares issued)..$900,000Excess over par190,000Method 1Paid-in capital, common stock..1,090,000From sale of treasury stock2,000Total paid-in capitalRetained earnings...$1,202,000350,000Treasury stock (600 shares at cost).Total stockholders' equity...(27,000)$1,525,000Stockholders'EquityContributed capital:Preferred 10% stock, $50 par (2,000 shares authorized andissued).....$ 100,000Common stock, $20 par (50,000 shares authorized,45,000 shares issued)900,000Method 2Additional paid-in capitalTotal contributed capital.202,000$1,202,000Retained earnings...350,000Treasury stock (600 shares at cost).Total stockholders'equity....(27,000)$1,525,000

The stockholder’s equity section of the company is prepared to calculate the total capital…

Answered: Specialty Auto Racing Inc. retails…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 73E: Preferred Dividends Eastern Inc.s equity includes 8%, $25 par preferred stock. There are 100,000...

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Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.

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Common stock, $36 par	$10,100,00
Paid-In Capital from Sale of Treasury Stock—Common	340,000
Paid-In Capital in Excess of Par—Common Stock	420,000
Paid-In Capital in Excess of Par—Preferred Stock	369,000
Preferred 1% Stock, $150 par	7,200,000
Retained Earnings	71,684,000
Treasury Stock - Common	1,010,000