The following account balances appear on the books of World Corporation as of December 31, 2012:

Preferred stock (5%, $50 par, 70,000 shares authorized,

50,000 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,500,000

Common stock ($1 par, 500,000 shares authorized,

300,000 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000

Paid-in capital in excess of par, preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000

Paid-in capital in excess of par, common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000

Net income for 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000

Dividends paid during 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000

Retained earnings, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,360,000

Required:

1. If the preferred stock is selling at $55 per share, what is the maximum amount of cash that World Corporation can obtain by issuing additional preferred stock given the present number of authorized shares?

2. If common stock is selling for $10 per share, what is the maximum amount of cash that can be obtained by issuing additional common stock given the present number of authorized shares?

3. Given the account balances at December 31, 2012, and ignoring parts (1) and (2), prepare, in good form, the stockholders’ equity section of the balance sheet.