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, $10 par value, 103,000 shares authorized

Preferred stock, 9 percent, par value $8 per share, 4,000 shares authorized

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

a: Sold and issued 20,000 shares of common stock at $16 cash per share.

b: Sold and issued 3,000 shares of preferred stock at $20 cash per share.

c: At the end of the year, the accounts showed net income of $60,000. No dividends were declared.

Required:

1. Prepare the stockholders' equity section of the balance sheet at the end of the year.

Explanation / Answer

Particulars

Amount

Common Stock-$10 par; 103,000 shares authorized and 20000 shares issued

20000*10

200000

Paid-in Capital in Excess of Par Value, Common Stock

20000*(16-10)

120000

Preferred Stock-$8 par; 4000 shares authorized and 3000 shares issued

3000*8

24000

Paid-in Capital in Excess of Par Value, Preferred Stock

3000*(20-8)

36000

Retained Earnings

60000

Total Stockholder's Equity

440000

Particulars

Amount

Common Stock-$10 par; 103,000 shares authorized and 20000 shares issued

20000*10

200000

Paid-in Capital in Excess of Par Value, Common Stock

20000*(16-10)

120000

Preferred Stock-$8 par; 4000 shares authorized and 3000 shares issued

3000*8

24000

Paid-in Capital in Excess of Par Value, Preferred Stock

3000*(20-8)

36000

Retained Earnings

60000

Total Stockholder's Equity

440000

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