Problem:
The ledger Of Omega Corporation at Dec. 31, 2007, after the books have been closed, contains the following stockholders equity accounts.
Preferred stock (10,000 shares issued) $1,000,000
Common stock (450,000 shares issued) $2,250,000
Paid in capital in excess of par value Pref. stock $ 200,000
Paid in capital in excess of stated value Com stock $1,600,000
Retained Earnings $ 3,060,000
A review of the accounting records reveals this information:
1) Preferred stock is 7%, 100 value non-cumulative. Since January 1, 2006, 10,000
Shares have been outstanding; 20,000 shares are authorized.
2) Common stock is no-par with a stated value of $5 per share; 600,000 shares are authorized.
3) The Jan. 1, 2007 balance in retained earnings was $2,580,000.
4) On Oct. 1, 60,000 shares of common stock were sold for cash at $8 per share
5) Net income for the year was $880,000.
6) On Dec.31, 2007, the directors authorized disclosure of a $130,000 restriction of retained earnings for plant expansion (Use Note A)
A) Reproduce the retained earnings account (T account) for the year.
B) Prepare the stockholders equity section of the balance sheet at Dec.31, 2007