Corporations: Dividends, Retained Earnings, and income Reporting

Dirk Company reported the following balances at December 31, 2020; common stock $500,000, paid-in-capital in excess of par value-common stock $100,00, and retained earnings $250,000. During 2021, the following transactions affected stockholders equity.

1. Issued preferred stock with a par value of $125,000 for $200,000
2. Purchased treasury stock (common) for $40,000
3. Earned net income of $180,000.
4. Declared and paid ash dividends of $56,000

Instructions

Prepare the stockholders' equity section of Dirk Company's December 31, 2021, balance sheet.

Solution