Finishing Touches has two classes of stock authorized: 7%, $10 par preferred, an

Question

Finishing Touches has two classes of stock authorized: 7%, $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 $24 per share. February 6 Issues 1,900 shares of 7% preferred stock for $13 per share. September 10 Repurchases 12,000 shares of its own common stock for $29 per share. December 15 Reissues 6,000 shares of treasury stock at $34 per share. In its first year of operations, Finishing Touches has net income of $149,000 and pays dividends at the end of the year of $94,000 ($1 per share) on all common shares outstanding and $1,330 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: Total paid-in capital Total stockholders' equity

Explanation / Answer

Stockholer's equity :

Stockholder's equity Contributed capital Common stock 100000 Additional paid in capital-common stock 2300000 Preferred stock 19000 Additional paid in capital-preferred stock 5700 Paid in capital from sale of treasury stock 30000 Total contributed capital 2454700 Retained earnings 53670 Total 2508370 Less: Treasury stock (174000) Total stockholder's equity 2334370

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