Specialty Auto Racing Inc. retails racing products for BMWs, Porsches, and Ferraris. The following accounts and their balances appear in the ledger of Specialty Auto Racing Inc. on July 31, the end of the current year:












Common Stock, $36 par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,080,000
Paid-In Capital from Sale of Treasury Stock—Common. . . . . . . . . . . . . . . . . . . . 340,000
Paid-In Capital in Excess of Par—Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 420,000
Paid-In Capital in Excess of Par—Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 384,000
Preferred 1% Stock, $150 par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,200,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,684,000
Treasury Stock—Common. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,008,000


Fifty thousand shares of preferred and 300,000 shares of common stock are authorized. There are 24,000 shares of common stock held as treasury stock.

Prepare the Stockholders’ Equity section of the balance sheet as of July 31, the end of the current year using Method 1 of Exhibit 4.


Answer:


















Stockholders’ Equity
Paid-in capital:
Preferred 1% stock, $150 par
(50,000 shares authorized,
48,000 shares issued) $ 7,200,000
Excess of issue price over par 384,000 $ 7,584,000
Common stock, $36 par
(300,000 shares authorized,
280,000 shares issued) $10,080,000
Excess of issue price over par 420,000 10,500,000
From sale of treasury stock 340,000
Total paid-in capital $18,424,000
Retained earnings 71,684,000
Total $90,108,000
Deduct treasury common stock
(24,000 shares at cost) 1,008,000
Total stockholders’ equity $89,100,000