Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, an
ID: 2529494 • Letter: F
Question
Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2018, its first year of operations: January 2 Issues 100,000 shares of common stock for $29 per share. February 6 Issues 2,400 shares of 9% preferred stock for $11 per share. September 10 Purchases 11,000 shares of its own common stock for $34 per share. December 15 Reissues 5,500 shares of treasury stock at $39 per share. In its first year of operations, Finishing Touches has net income of $154,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $2,160 on all preferred shares outstanding. Required: Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2018.
Explanation / Answer
Finishing Touches
Balance sheet
(stockholders' equity section)
Stock holder's equity Preferred stock 24000 Common Stock 100000 Total stockholders equity 124000 Additional paid in capital Preferred stock (2400*1) 2400 Common Stock (100000*28)+(5500*5) 2827500 Total additional paid in capital 2829900 Total paid in capital 2953900 Retained earnings (154000-94500-2160) 57340 Total paid in capital and retained earnings 3011240 Less: treasury stock (5500*34) (187000) Total stockholders equity 2824240Related Questions
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