Exercise 11.4

Dividends Preferred and Commons

Reporting Stockholders' Equity with Treasury Stock Early in 2019, Feller Corporation was formed with authorization to issue 50,000 shares of $1 par value common stock. All shares were issued at a price of $8 per share. The corporation reported net income of $95,000 in 2019, $27,500 in 2020 , and $75,700 in 2021. No dividends were declared in any of these three years. In 2020, the company purchased its own shares for $35,000 in the open market. In 2021, it reissued all of its treasury stock for $40,000. Instructions a. Prepare the stockholders' equity section of the balance sheet at December 31,2021 . Include a supporting schedule showing your computation of retained earnings at the balance sheet date. (Hint: Income increases retained earnings.) b. As of December 31 , compute the company's book value per share of common stock. c. Explain how the treasury stock transactions in 2020 and 2021 were reported in the company's statement