Reference no: EM132843887

In 2014, Randy Martin began operating NEK Inc., a chain of men's shirt retailers. The corporation was authorized to issue unlimited shares of no-par value common stock and unlimited shares of $9 cumulative, no par value, preferred stock. 10 000 shares of the preferred stock were issued for a total of $900 000 and 45 000 shares of common stock were issued at $40 per share. During the first three years of its existence, NEK Inc. earned a total of $776 000 and paid yearly dividends of $3 per share on the common stock, in addition to the regular dividends on the preferred stock. During 2017, however, the corporation incurred a loss of $71 000 and paid no dividends.

Problem 1: Calculate: The retained earnings (deficit) as of December 31, 2017 (show your work). Then, prepare the shareholders' equity section of the balance sheet for each corporation at December 31, 2017.