To answer this question, we need to track the various transactions and their impact on the authorized and issued shares of common and preferred stock, as well as the financial implications. Let's go step by step:
1. Accepts a subscription contract to 7,000 shares of common stock at $42 per share and receives a 30% down payment:
- Authorized shares: No changes.
- Common stock issued: 7,000 x 0.30 = 2,100 shares
- Common stock subscribed: 7,000 - 2,100 = 4,900 shares
2. Collects the remaining balance of the subscription contract and issues the common stock:
- Common stock issued: 4,900 shares (no changes)
3. Acquires a building by paying $23,000 cash and issuing 2,000 shares of common stock and 600 shares of preferred stock:
- Authorized shares: No changes.
- Common stock issued: 2,100 + 2,000 = 4,100 shares
- Preferred stock issued: 600 shares
4. Sells 1,000 shares of common stock at $45 per share:
- Authorized shares: No changes.
- Common stock issued: 4,100 - 1,000 = 3,100 shares
5. Sells 900 shares of preferred stock at $112 per share:
- Authorized shares: No changes.
- Preferred stock issued: 600 - 900 = (300) shares (assuming preferred stock can be cancelled)
6. Declares a two-for-one stock split on the common stock, reducing the stated value to $2.50 per share:
- Authorized shares: No changes.
- Common stock issued: 3,100 x 2 = 6,200 shares
- Stated value per share: $5 -> $2.50
To summarize the outcome:
- Authorized shares of no-par, $5 stated-value common stock: 20,000 shares
- Authorized shares of 9%, $100 par preferred stock: 5,000 shares
- Common stock issued: 6,200 shares
- Preferred stock issued: 300 shares
Please note that this summary only shows the changes in the authorized and issued shares and does not include the financial impact of the transactions. To fully understand the financial implications, additional information such as the total cash inflow from stock sales and the total cash outflow for the building acquisition is required.