Tandy Company was issued a charter by the state of Indiana on January 15 of this

Question

Tandy Company was issued a charter by the state of Indiana on January 15 of this year. The charter authorized the following:

     Common stock, $8 par value, 119,000 shares authorized

     Preferred stock, 10 percent, par value $10 per share, 4,100 shares authorized

During the year, the following transactions took place in the order presented:

a. Sold and issued 21,600 shares of common stock at $20 cash per share.

b. Sold and issued 2,400 shares of preferred stock at $24 cash per share.

c. At the end of the year, the accounts showed net income of $40,800. No dividends were declared.

Required: 1. Prepare the stockholders' equity section of the balance sheet at the end of the year TANDY, INCORPORATED Balance Sheet (Partial) At December 31, this year Stockholders' equity Contributed capital Total contributed capital Total stockholders' equity

Explanation / Answer

a.

Cash $432000

To common stock $172800

To additional paid in capital $259200

b.

Cash $57600

To preferred stock $24000

To additional paid in capital $33600

c.

Income summary $40800

To retained earnings $40800

Tandy Incorporated

Balance sheet (Partial)

Stock holders equity:

Common stock $172800

Preferred stock $24000

additional paid in capital common stock $259200

adsitional paid in capital preferred stock $33600

Total contributed capital $489600

Retained earnings $40800

Total stockholders equity $530400.

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