Question

In its first year of operations, Finishing Touches has net income of $152,000 and pays dividends at the end of the year of $94,000 ($1 per share) on all common shares outstanding and $1,540 on all preferred shares outstanding Required: Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.) Answer is not complete. FINISHING TOUCHES Balance Sheet (Stockholders' Equity Section) December 31, 2021 Stockholders' equity: Additional paid-in capital Total paid-in capital 0 Common stock х Preferred stock х $ Total stockholders' equity 0

Answer 1

Solution:

Finishing Touches
Balance Sheet
Stockholders' Equity section
December 31, 2021
Stockholder's Equity:
Preferred Stock, 7%, $10 Par, 1600 shares issued and outstanding (2200*$10)	$22,000
Paid-in capital in excess of par- Preferred Stock (2200*$3)	$6,600
Common Stock, $1 par, 100000 issued and 94000 outstanding shares	$1,00,000
Paid-in capital in excess of Par value- common stock (100000*$26)	$26,00,000
Paid-in capital from treasury stock [6000*($37-$32)]	$30,000
Total Paid in capital	$27,58,600
Add: Retained earnings ($152000-$94000-$1540)	$56,460
Total	$28,15,060
Less: Treasury Stock [(12000-6000)*$32]	-$1,92,000
Total Stockholder's Equity	$26,23,060