Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2018, its first year of operations:
|January 2||Issues 100,000 shares of common stock for $17 per share.|
|February 6||Issues 1,200 shares of 8% preferred stock for $12 per share.|
|September 10||Repurchases 10,000 shares of its own common stock for $22 per share.|
|December 15||Reissues 5,000 shares of treasury stock at $27 per share.|
In its first year of operations, Finishing Touches has net income of $142,000 and pays dividends at the end of the year of $95,000 ($1 per share) on all common shares outstanding and $960 on all preferred shares outstanding.
Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2018.
What Is Retained Earnings:
Retained Earnings is a general ledger account that is presented in the Equity section of the balance sheet. A company's Retained Earnings include the cumulative income earned by the company net of any dividends distributed.
Answer and Explanation: 1
|Common stock, $1 par||=100,000 *1||100,000|
|Preferred stock, 8%,10$ par||=1,200 *10||12,000|
|Additional paid in capital, Common||=1...|
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fromChapter 11 / Lesson 7
In this lesson, we'll learn about the items reported under retained earnings. We'll also learn how to calculate retained earnings by using these items.