Major League Apparel has two classes of stock authorized: 4%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2021, its first year of operations:   January   2   Issue 120,000 shares of common stock for $56 per share. February   14   Issue 46,000 shares of preferred stock for $13 per share. May   8   Purchase 12,000 shares of its own common stock for $46 per share. May   31   Resell 6,000 shares of treasury stock for $51 per share. December   1   Declare a cash dividend on its common stock of $0.70 per share and a $18,400 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint: Dividends are not paid on treasury stock.) December   30   Pay the cash dividends declared on December 1 Record each of these transactions.

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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.