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 TANDY, INCORPORATED Balance Sheet (Partial) At December 31, This Year Stockholders' equity Contributed capital: Common stock Preferred stock $ 1,030,000 32,000i Total contributed capital 1,062,000 Total stockholders' equity $ 1,062,000

Explanation / Answer

CALCULATION OF STOCKHOLDER'S EQUITY:

TANDY, INCORPORATED

Balance Sheet (Partial)

At December 31, This Year

TANDY, INCORPORATED

Balance Sheet (Partial)

At December 31, This Year

STOCKHOLDER'S EQUITY AMOUNT($) AMOUNT($) Issued capital Common Stock , Issued (20,000 shares @ $10 par) 200,000 Add: Paid in capital in excess of par value (20,000 shares @ $6 per share ) 120,000 320,000 Preferred Stock (3,000 shares @ $8 par) 24,000 Add: Paid in capital in excess of par value (3,000 shares @ $12 per share) 36,000 60,000 Total paid in capital 380,000 Add: Net Income (Retained Earnings) 60,000 Total Stockholder's equity 440,000 *----------------*-------------------*-----------------*---------------*

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