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:
Issued a total of 40,000 shares of the common stock to the company's founders for $11 per share.
Sold 5,000 shares of the preferred stock at $18 per share.
Sold 3,000 shares of the common stock at $14 per share and 1,000 shares of the preferred stock at $28.
Net income for the first year was $48,000.