Reference no: EM132584095

Point 1: Flag Publications was organized early in 1997 with authorization to issue 5,000 shares of $100 par value preferred stock and 1 million shares of $2 par value common stock. All of the preferred stock was issued at par, and 200,000 shares of common stock were sold for $16 per share. The preferred stock pays a 10% cumulative dividend as is callable at $110.

Point 2: During the first five years of operations (1997 through 2001) the corporation earned a total of $3,200,000 and paid dividends of $1 per share each year on the common stock. In 2002, however, the corporation reported a net lossof $1,300,000 and paid no dividends.

Required:

Question 1: Prepare the stockholder's equity section of the balance sheet at December 31, 2002.