Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, an
ID: 2580608 • 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 $22 per share.
February 6 Issues 1,700 shares of 9% preferred stock for $11 per share.
September 10 Repurchases 11,000 shares of its own common stock for $27 per share.
December 15 Reissues 5,500 shares of treasury stock at $32 per share.
In its first year of operations, Finishing Touches has net income of $147,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $1,530 on all preferred shares outstanding.
Required:
Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
FINISHING TOUCHES Balance Sheet (Stockholders’ Equity Section) December 31, 2018 Stockholders’ equity: Preferred stock $17,000 Common stock 100,000 Additional paid-in capital Total paid-in capital 117,000 Retained earnings Treasury stock Total stockholders’ equity $117,000Explanation / Answer
FINISHING TOUCHES Balance Sheet (Stockholders’ Equity Section) December 31, 2018 Stockholders’ equity: Preferred stock 17000 Common stock 1,00,000 Additional paid-in capital 2129200 Total paid-in capital 22,46,200 Retained earnings 50970 Treasury stock -148500 Total stockholders’ equity 21,48,670
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