E$11-5($Algo$)$ Determining the Effects of the Issuance of Common and Preferred Stock $[$LO $11-2,$ LO $11-4]$

Dornbusch Associates was issued a charter on January $15$ authorizing the following capital stock:

Common stock, $$6$ par, $100,000$ shares, one vote per share.

Preferred stock, $7$ percent, par value $$10$ per share, $5,000$ shares, nonvoting.

The following selected transactions were completed during the first year of operations in the order given:

a$.$ Issued $12,000$ shares of the $$6$ par common stock at $$15$ cash per share.

b$.$ Issued $2,200$ shares of preferred stock at $$19$ cash per share.

c$.$ At the end of the year, the accounts showed net income of $$30,000.$ No dividends were declared.

Required:

Prepare the stockholders' equity section of the balance sheet at December $31.($Helpful tool: Record Journal Entries for each $($A$-$D$)$

transaction before attempting to complete the balance sheet below$)$

Assume that you are a common stockholder of Dornbusch Associates. If the company needed additional capital, would you prefer

to have it issue additional common stock or additional preferred stock?

Complete this question by entering your answers in the tabs below.

Required $2$

Prepare the stockholders' equity section of the balance sheet at December $31.$