Answer:
The requirement of question is to prepare journal entries for each transaction and prepare stockholder's equity section of balance sheet;The net income for the year is $35,000.No dividends were declared or paid during the year.
Explanation:
a.Cash 4,900*4*39 Dr.$764,400
Common Stocks Cr.$764,400
b. Cash 5,900*39 Dr.$230,100
Common Stocks Cr.$230,100
c. Cash 7,900*21 Dr.$165,900
Preferred stocks 7,900*10 Cr.$79,000
Paid in capital in excess of par 7,900*(21-10) Cr.$86,900
Extracts from Balance Sheet
Common Stocks (764,400+230,100) $994,500
Preferred Stocks $79,000
Paid in Capital in excess of par $86,900
Retained Earnings $35,000
Total $1,195,400
