Question

Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $t par value common. The following transactions affect stockholders' equity during 2021, its first year of operations: January 2 Issues 100,000 shares of common stock for $28 per share. February 6 Issues 2,300 shares of 8% preferred stock for $12 per share. September 10 Purchases le,eee shares of its own common stock for $33 per share. December 15 Resells 5,000 shares of treasury stock at $38 per share. In its first year of operations, Finishing Touches has net income of $153,000 and pays dividends at the end of the year of $95.000 ($1 per share) on all common shares outstanding and $1,840 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 1

Finishing Touches

Balancesheet

(Stockholders Equity Section December 31,2021)

Item	Calculation	Amount
Common Stock, $ 1 Par	100,000 * 1	$ 100,000
Preferred Stock 8% $ 10 Par	2,300 * 10	$ 2,3000
Additional Paid in CapitalCommon	100, 000 *( 28- 1)	$2,700,000
Additional Paid In Capital, Preferred	2,300 * (12 - 10)	$ 4,600
Retained Earnings	($ 153,000 - $ 95,000 - $ 1,840)	$ 56,160
Treasury Stock	10,000 * 33	($ 165,000)
Additional Paid In Capital	5,000 * (38 - 33)	$ 25,000
Total Stockholders Equity	($10,000 +$23,000+$2,700,000+$4,600+$56,160+$25,000-$165,000)	$ 2,743,760