On January 1, 2010, Smith Inc obtained authorization to issue 500,000 shares of $10 par...
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On January 1, 2010, Smith Inc obtained authorization to issue 500,000 shares of $10 par value common stock and 100,000 shares of $50 par 6% cumulative preferred stock. During the first year of operations, the company issued 60,000 preferred shares at $62 per share and 140,000 common shares at $18/share. At the end of the year, the company reported a net loss of $220,000 and paid no dividends. During 2011, the company needed extra capital and issued 55,000 common shares at $16/share. The company reported a net profit of $810,000 but paid no dividends. During 2012, the company reacquired 30,000 shares of its common stock at $15/share. The company generated an income of $1,250,000 which was sufficient to pay a dividend of $2.5/share for the common shareholders. Prepare the stockholders' equity section of a balance sheet at December 31, 2012 include a supporting schedule to show the calculation of Retained Earnings (journal entries not required)
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