Finishing Touches has two classes of stock authorized: 7%, $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 $30 per share.February 6 Issues 2,500 shares of 7% preferred stock for $13 per share.September 10 Purchases 12,000 shares of its own common stock for $35 per share.December 15 Resells 6,000 shares of treasury stock at $40 per share.In its first year of operations, Finishing Touches has net income of $155,000 and pays dividends at the end of the year of $94,000 ($1 per share) on all common shares outstanding and $1,750 on all preferred shares outstanding. Required:Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021.

Stockholders’ equity: It refers to the residual amount of assets that are available to the company’s…

Answered: Finishing Touches has two classes of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Finishing Touches has two classes of stock authorized: 7%, $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 $30 per share.
February	6	Issues 2,500 shares of 7% preferred stock for $13 per share.
September	10	Purchases 12,000 shares of its own common stock for $35 per share.
December	15	Resells 6,000 shares of treasury stock at $40 per share.

In its first year of operations, Finishing Touches has net income of $155,000 and pays dividends at the end of the year of $94,000 ($1 per share) on all common shares outstanding and $1,750 on all preferred shares outstanding.

Required:

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

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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