Refer to the information in E106. In its first year of operations, Finishing Touches has net income

Question:

Refer to the information in E10–6. In its first year of operations, Finishing Touches has net income of $160,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $2,400 on all preferred shares outstanding.

Required:

Prepare the stockholders’ equity section of the balance sheet for Finishing Touches as of December 31, 2021.

E10-6

Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 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 $35 per share.

February 6 Issues 3,000 shares of 8% preferred stock for $11 per share.

September 10 Purchases 11,000 shares of its own common stock for $40 per share.

December 15 Resells 5,500 shares of treasury stock at $45 per share.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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