Common Stock Issue: 46,000 shares $14/share 3,600 shares $19/share Preferred Stock Issue: 10,000 shares $15/share 1,000 shares $15/share Net Income: $54,000 No dividends were declared. Calculations: Common Stock: Total shares of common stock = 46,000 + 3,600 = 49,600 shares The total amount from a common stock: (46,000 shares * $14) + (3,600 shares * $19) $644,000 + $68,400 = $712,400 Preferred Stock: Total shares of preferred stock = 10,000 + 1,000 = 11,000 shares Total amount from preferred stock = 11,000 shares * $15 = $165,000 Stockholders' Equity Section: Common Stock (49,600 shares, par value $14 per share): $712,400 Preferred Stock (11,000 shares, par value $15 per share): $165,000 Retained Earnings : $54,000 (This is the net income for the year as no dividends were declared.) The stockholders' equity section of the balance sheet at December 31 would look like this: Contributed capital Common Stock 712,400 Preferred Stock 165,000 Total Contributed Capital 877,400 Retained Earnings 54,000 Total Stockholders' Equity 931,400 The income statement shows the revenue and expenses that occurred during the year to calculate the net income for the company. TNT Inc Income statement Sales $859,500 Cost of goods sold $445,500 Gross profit Gross Profit = Sales − Cost of Goods Sold $859,500 - $445,500= $ 414000 Depreciation expense $99,000 General and administrative expenses $118,500 Operating income Operating Income = Gross Profit − Operating Expenses $ 414000-( $99,000+ $118,500)= $196,500 Interest expense $7,125 Earnings before taxes Earnings Before Taxes (EBT) = Operating Income − Interest Expense $ 196,500- $7,125 = $189,375 Taxes $75,750 Net income Net Income = Earnings Before Taxes − Taxes $189,375 - $75,750= $113,625 The balance sheet shows the financial position as of date that is assets and liabilities position of the company as of date. TNT Inc Balance sheet Current assets Cash $337,500 Inventory $148,950 Accounts receivable $251,250 Total current assets Total Current Assets = Cash + Inventory + Accounts Receivable $337,500 + $148,950+ $251,250 = $737,700 Noncurrent assets Buildings & Equipment $1,342,500 Accumulated depreciation $394,500 Buildings & Equipment, net $948,000 Total assets Total Assets = Total Current Assets + Total Noncurrent Assets $737,700 + $948,000 = $1,684,900 Current liabilities Accounts payable $153,000 Taxes payable $79,500 Accrued expenses $11,850 Notes payable $113,850 Total current liabilities Total Current Liabilities = Accounts Payable + Taxes Payable + Accrued Expenses + Notes Payable $385,200 Longterm liabilities Longterm debt $501,000 Total liabilities Total Liabilities = Total Current Liabilities + Long-term Liabilities $385,200+ $501,000 = $886,200 Owner'sEquity Common stock $433,500 Retained earnings $393,000 Total owner's equity Total Owner’s Equity = Common Stock + Retained Earnings $826,500 Total liabilities and equity Total Liabilities and Equity = Total Liabilities + Total Owner’s Equity $886,200+ $826,500= $1,712,700

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