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E11-3 Preparing the Stockholders' Equity Section of the Balance Sheet [LO2, LO4] North Wind Aviation received its charter during January 2007.



E11-3 Preparing the Stockholders' Equity Section of the Balance Sheet [LO2, LO4]

North Wind Aviation received its charter during January 2007. The charter authorized the following capital stock:

Preferred stock: 8 percent, par $10, authorized 20,000 shares.

Common stock: par $7, authorized 50,000 shares.

During 2007, the following transactions occurred in the order given:

a.


Issued a total of 40,000 shares of the common stock to the company's founders for $11 per share.

b.


Sold 5,000 shares of the preferred stock at $18 per share.

c.


Sold 3,000 shares of the common stock at $14 per share and 1,000 shares of the preferred stock at $28.

d.


Net income for the first year was $48,000.

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