Mart, Inc., is a public company whose shares are traded in the over-the-counter market. At December 31, Year 2, Mart had 6 million authorized shares of $5 par-value common stock, 2 million shares of which were issued and outstanding. The equity accounts at December 31, Year 2, had the following balances: Common stock Additional paid-in capital Retained earnings $10,000,000 7,500,000 3,250,000 Transactions during Year 3 and other information relating to Mart's equity accounts were as follows: On January 5, Year 3, Mart issued 100,000 shares of $50 par-value, 9% cumulative, convertible preferred stock at $54 per share. Each share of preferred stock is convertible, at the option of the holder, into two shares of common stock. Mart had 250,000 authorized shares of preferred stock. The preferred stock has a liquidation value of $55 per share. On February 1, Year 3, Mart reacquired 20,000 shares of its common stock for $16 per share. Mart uses the cost method to account for treasury stock. On March 15, Year 3, Mart paid $200,000 for 10,000 shares of common stock of Lew, Inc., a public company whose stock is traded on a national stock exchange. This stock was 1% of the outstanding common stock of Lew. It was acquired for long-term investment purposes and had a fair value of $15 per share on December 31, Year 3. This decline in fair value was not due to credit losses. On April 30, Year 3, Mart had completed an additional public offering of 500,000 shares of its $5 par-value common stock. The stock was sold to the public at $12 per share, net of offering costs.