Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, an

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 $26 per share.

February 6 Issues 2,100 shares of 9% preferred stock for $11 per share.

September 10 Repurchases 11,000 shares of its own common stock for $31 per share.

December 15 Reissues 5,500 shares of treasury stock at $36 per share.

In its first year of operations, Finishing Touches has net income of $151,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $1,890 on all preferred shares outstanding.

Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2018.

Explanation / Answer

Calculations:

Finishing Touches Partial Balance Sheet as of December 31, 2018 Stockholders' equity 9% Preferred stock, $10 par value, 2,100 shares issued and outstanding 21000 Common stock, $1 par value, 100000 issued and 94,500 shares outstanding 100000 Paid-in capital in excess of par - Preferred stock 2100 Paid-in capital in excess of par - Common stock 2500000 Paid-in capital in excess of par - Treasury stock 27500 Total paid-in capital 2650600 Retained earnings 54610 Less treasury stock, 5,500 shares at cost -170500 Total stockholders' equity 2534710

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