At the end of Year 1, the balance sheet for the Rich Food Restaurant showed cash at $20,000. At the end of Year 2, the balance s
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Answer:
1. Attached is the Stockholder's equity section of the company's balance at the end of the current year.
Preferred stock = 2,500 (half of 5,000) were issued at par value of $100 each = 2,500 * 100 = $250,000
Additional Paid in capital for Preferred stock = (103 - 100) * 2,500 = $7,500
Common stock = 59,000 issued at stated value of $2 = 59,000 *2 = $118,000
Additional Paid in capital for Common stock = (22 - 2) * 59,000 = $1,180,000
2. The Stockholder's equity section is prepared with the book values of the relevant entries. As such, it WILL NOT be affected by changes in market value.
