Question

Tandy Company was issued a charter by the state of Indiana on January 15 of this year. The charter authorized the followin Common stock, $6 par value, 115,000 shares authorized Preferred stock, 7 percent, par value $10 per share, 4,900 shares authorized During the year, the following transactions took place in the order presented: a. Sold and issued 21,700 shares of common stock at $20 cash per share. b. Sold and issued 1,300 shares of preferred stock at $24 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. TANDY, INCORPORATED Balance Sheet (Partial) At December 31, this year Stockholders' equity: Contributed capital: Common stock [ $ Preferred stock Additional paid-in capital, common stock Additional paid-in capital, preferred stock 434,000 31,200 86,800 13,000 565,000 Total contributed capital Retained earnings Total stockholders' equity $ 565,000

Answer 1

TANDY, INCORPORATED
Balance Sheet (Partial)
At December 31, this year
Stockholders' equity:
Contributed capital:
Common stock	130,200
Additional paid-in capital, common stock	303,800
Common stock - Contributed capital	434,000
Preferred stock	13,000
Additional paid-in capital, Preferred stock	18,200
Preferred stock - Contributed capital	31,200
Total Contributed Capital	465,200
Retained earnings	40,600
Total Stockholders' equity		$505,800

Common stock = Number of common shares issued x Par value of one common share

21,700 x 6

= $130,200

Preferred stock = Number of preferred shares issued x Par value of one preferred share

= 1,300 x 10

= $13,000

Additional paid-in capital, common stock = Number of shares issued x ( issue price of one share- par value of one share)

= 21,700 x (20-6)

= 21,700 x 14

= $303,800

Additional paid-in capital, Preferred stock = Number of shares issued x ( issue price of one share- par value of one share)

= 1,300 x (24-10)

= 1,300 x 14

= $18,200

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