Question

Tandy Company was issued a charter by the state of Indiana on January 15 of this year. The charter authorized the following:

Common stock, $6 par value, 110,000 shares authorized Preferred stock, 14 percent, par value $6 per share, 4,800 shares authorized During the year, the following transactions took place in the order presented:
A. Sold and issued 20,500 shares of common stock at $12 cash per share.
B. Sold and issued 1,200 shares of preferred stock at $16 cash per share.
C. At the end of the year, the accounts showed net income of $40,900. No dividends were declared.
Required:
Prepare the stockholders’ equity section of the balance sheet at the end of the year.
TANDY, INCORPORATED
Balance Sheet (Partial)
At December 31, this year
Stockholders’ equity:
Contributed capital:
Common stock
Preferred stock
Additional paid-in capital, common stock
Additional paid-in capital, preferred stock
Total contributed capital
Retained earnings
Total stockholders’ equity

Answer 1

See below

Step-by-step explanation:

Tandy Incorporated

Balance sheet (Partial)

At December 31,

Stockholder's equity :

Contributed capital :

Common stock

$123,000

Preferred stock

$7,200

Additional paid in capital common stock

$123,000

Additional paid in capital preferred

$12,000

Total contributed capital

$265,200

Retained earnings

$40,900

Total stockholder's equity

$306,100

Workings:

Common stock = Number of common shares issued × Par value of one common share

= 20,500 × $6

= $123,000

Preferred stock = Number of preferred shares issued × Par value of one preferred share

= 1,200 × $6

= $7,200

Additional paid in capital , common stock = Number of shares issued × ( issue price of one share - Par value of one share)

= 20,500 × ($12 - $6)

= 20,500 × $6

= $123,000

Additional paid in capital , preferred stock = Number of shares issued × (Issue price of one share - Par value of one share)

= 1,200 × ($16 - $6)

= 1,200 × $10

= $12,000