River’s Edge Canoe & Kayak is authorized to issue 10,000 shares of $100 par, preferred 9% stock and 500,000 shares of $5 par common stock. The following balances appeared in the Balance Sheet section of the company’s work sheet for the year ended December 31.

Instructions

1. Prepare the statement of stockholders’ equity.

a. During the period the corporation issued 500 shares of 9% preferred stock at par and 25,000 shares of common stock at $9.

b. The net income for the year was $425,000.

2. Prepare the balance sheet.

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101 Cash in Bank 115 Accounts Receivable 120 Notes Receivable 130 Merchandise Inventory 135 Prepaid Ins. 140 Supplies 145 Delivery Truck 150 Store Equipment 201 Accounts Payable 202 Dividends Payable-Preferred $506,010 850,680 400,000 388,815 3,600 10,500 139,298 363,009 62,412 22,500