1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
faust18 [17]
3 years ago
5

Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transaction

s affect stockholders' equity during 2015, 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 Repurchases 11,000 shares of its own common stock for $40 per share.
December 15 Reissues 5,500 shares of treasury stock at $45 per share.


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, 2015. (Amounts to be deducted should be indicated by a minus sign.)

FINISHING TOUCHES
Balance Sheet
(Stockholders’ Equity Section)
December 31, 2015
Stockholders’ equity:
Common stock
Preferred stock
Treasury stock
Additional paid-in capital
Total paid-in capital
Retained earnings
Treasury stock
Total stockholders’ equity
Business
1 answer:
natita [175]3 years ago
7 0

Answer:

FINISHING TOUCHES

Balance Sheet  December 31, 2015

(Stockholders’ Equity Section)

Stockholders’ equity:

Common stock  = $100,000

Preferred stock  =  $30,000

Treasury stock  = -$5,500

Additional paid-in capital  = $3,216,000

Total paid-in capital  = $3,340,500

Retained earnings  = $63,100

(Preferred stock  = -$,30,000)

Total stockholders’ equity = $3,373,600

Explanation:

a) 100,000 Common stock issued at $35 per share with $1 par is valued at $1 in the Common Stock section while the difference $34 $(35 - 1) is taken to the Additional paid-in capital at 100,000 x $34.

b) 3,000 Preferred Stock  issued at $11 per share with $10 par is valued at $10 in the Preferred Stock while the difference $1 $(11 - 10) is taken to the Additional paid-in capital at 3,000 x $1.

c) Treasury stock is the repurchase of stock by the company.  It is a contra account to the equity accounts.  It is therefore deducted from the equity section.  Two methods exist for its treatment: the cost method and the par value treatment.  We used the par value treatment.

This involves stating the par value movements in the Treasury stock while  the additional loss or additional gain is taken to the Additional Paid-in Capital section.

On the other hand, the cost method treats the cost of repurchase in the Treasury stock.

d) Additional Paid-in Capital (APIC) account records the above par value received.  It is also where the above par value is deducted for Treasury Stock.

e) Retained Earnings represent the net income after paying dividends to common stockholders and preferred stockholders.

f) To get the total stockholders' equity, the preferred stock is deducted.  Holders of preferred stock are not equity holders.

You might be interested in
A customers calls her broker to discuss her account. The broker recommends that the customer buy 500 shares of DEF stock. The cu
KIM [24]

Answer:

A. <u>Market Order</u>

Explanation:

In a market order, the securities are bought and sold immediately at the current market price prevailing at that time of the day.

Under this, order size is entered such as quantity of stock, the action to be taken i.e buy or sell and no buying/selling rate is mentioned, rather "market" option is checked.

Such market price keeps fluctuating every every moment so the order would be completed at that price which prevailed at that exact moment.

In the given case, the broker upon instructions of the client immediately got the order executed of 500 shares in less than a minute. This is the case of market order wherein the order was executed at current market price.

3 0
3 years ago
Larry and Susan work in an office near 2 Live Stew and Stew-topia, specialty stew restaurants on the same block. Larry notices t
denis-greek [22]

Answer: B. to prove Stew-topia engaged in predatory pricing, you would need to prove that Stewtopia priced stew below average variable cost with the specific intention of driving 2 Live Stew out of business

Explanation:

Predatory pricing is the pricing of goods in such a way that it is so low that it is even below average variable cost. The logic being that in the Shortrun, if a firm cannot cover it's variable cost, it would have to shutdown.

Larry would therefore be correct in saying that to prove Stew-topia engaged in predatory pricing, it would need to proven that Stewtopia priced stew below average variable cost with the specific intention of driving 2 Live Stew out of business.

8 0
3 years ago
Q 2.3: mason corporation purchased a piece of land 5 years ago when the price of land was low. it plans to develop the land into
TiliK225 [7]

On their classified balance sheet, Mason Corporation would classify this land as  <u>"a long term investment".</u>


A long-term investment refers to an account on the asset side of an organization's monetary record that speaks to the organization's speculations, including stocks, bonds, land and money, that it expects to hold for over a year. The long-term investment account varies to a great extent from the short-term investment in that the transient speculations will no doubt be sold, while the long haul speculations may never be sold.

4 0
3 years ago
Which action would be most likely to affect whether scroll bars appear in a Word document?
Luden [163]

Answer:

-D

Explanation:

I'm pretty sure it's zooming in or out on the document

6 0
3 years ago
Given the following information, prepare an income statement for the Dental Drilling Company.
dmitriy555 [2]

Answer:

Results are below.

Explanation:

<u>Giving the following information:</u>

Selling and administrative expense $90,000

Depreciation expense 75,000

Sales 621,000

Interest expense 46,000

Cost of goods sold 231,000

Taxes 50,000

<u>With the information listed above, we need to make an income statement following the structure below:</u>

<u></u>

Sales= 621,000

COGS= (231,000)

Gross profit= 390,000

Selling and administrative expense= (90,000)

Depreciation expense= (75,000)

Interest expense= (46,000)

Eearning before taxes (EBT)= 179,000

Taxes= (50,000)

Net operating income= 129,000

8 0
3 years ago
Other questions:
  • Wendell Company owns 28% of the common stock of Porter Company and accounts for the investment using the equity method. Assuming
    10·1 answer
  • When a partnership is liquidated, the journal entry to pay the claims of creditors would include a debit to
    6·1 answer
  • María works for 5 hours and 15 minutes. How should she write that on her time card?
    12·1 answer
  • When do you think home prices peaked? Why?
    10·1 answer
  • Nolan Dry Cleaners has determined the following about its​ costs: Total variable expenses are $40,000​, total fixed expenses are
    15·1 answer
  • In planning for a crisis, the leader has to focus on five integrated tasks. These tasks include all of the following EXCEPT: a.
    5·1 answer
  • William took out a $440,000 mortgage to purchase his personal residence. The residence is worth almost $1 million, and William w
    6·1 answer
  • Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%.What would be the fair return for $1 Dis
    9·1 answer
  • What are the four instruments of exchange
    12·1 answer
  • the initial impact of an increase in an investment tax credit is to shift aggregate a. demand left. b. supply left. c. supply ri
    13·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!