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:

1

Common Stock, $36 par

$10,080,000.00

2

Paid-In Capital from Sale of Treasury Stock-Common

340,000.00

3

Paid-In Capital in Excess of Par-Common Stock

420,000.00

4

Paid-In Capital in Excess of Par-Preferred Stock

384,000.00

5

Preferred 1% Stock, $150 par

7,200,000.00

6

Retained Earnings

71,684,000.00

7

Treasury Stock-Common

1,008,000.00

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.

Stockholders’ Equity

Preferred 1% Stock, $150 par                           $7,200,000

Common Stock, $36 par                                  $10,080,000

Paid-In Capital Treasury Stock-Common        $340,000    

Total Paid In capital                                         $17,620,000

Paid-In Capital Excess Par Common Stock    $420,000    

Paid-In Capital Excess Par Preferred Stock   $ 384,000

Retained Earnings                                             $71,684,000

Treasury Stock-Common                                 ($1,008,000)

Total Shareholder's Equity                             $89,100,000

Explanation:

Stockholder's equity is compromised of Common stock, all paid-in-capitals, retained earning and net of treasury stock. Treasury stock is the repurchase of earlier issued stock.

d. the economy will face inflation.

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