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, 110,000 shares authorized Preferred stock, 15 percent, par value $6 per share, 4,000 shares authorized During the year, the following transactions took place in the order presented a. Sold and issued 20,300 shares of common stock at $12 cash per share. b. Sold and issued 2,500 shares of preferred stock at $16 cash per share. c. At the end of the year, the accounts showed net income of $40,600. No dividends were declared Required: 1. Prepare the stockholders equity section of the balance sheet at the end of the year Balance Sheet (Partial At D Stockholders' equity. Contributed capital: Common stock Additional paid-in capital, common stock Addsonal paid-in capital, preferred stock Total contributed capital Retained earnings Total stockholders' equity

Explanation / Answer

Tandy Incorporated

Balance sheet

Particulars Amount($)

Authorised capital:

Common stock (110000 * $8 ) $880000

Preferred stock (4000 * $6) $24000

Total authorised capital $904000

Issued capital:

Common stock (20300 * $12) $243600

Preferred stock (2500 * $6) $15000

Additional paid in capital:  

Common stock $81200*

Preferred stock $25000

Total contributed capital $364800

Retained earnings $40600

Total shareholders equity $405400.

* $81200 = [(20300 * $12) - (20300 * $8)]

** $25000 = [(2500 * $16) - (2500 * $6)]

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