Stockholders’ Equity Section of a Balance Sheet
When Resisto Systems, Inc., was formed, the company was authorized t o issue 5,000 shares of $100 par value, 8 percent cumulative preferred stock, and 100,000 shares of $2 stated value common stock.
Half of the preferred stock was issued at a price of $103 per share, and 70,000 shares of the common stock were sold for $13 per share. At the end of the current year, Resisto has retained earnings of $475,000.
a. Prepare the stockholders’ equity section of the company’s balance sheet at the end of the current year.
b. Assume Resisto Systems’s common stock is trading at $24 per share and its preferred stock is trading at $107 per share at the end of the current year. Would the stockholders’ equity section prepared in part a be affected by this additional information?
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