Exercise 10-7A Prepare the stockholders' equity section (LO10-7)

Finishing Touches has two classes of stock authorized: 8%, $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 $23 per share.
February		6		Issues 1,800 shares of 8% preferred stock for $12 per share.
September		10		Purchases 10,000 shares of its own common stock for $28 per share.
December		15		Resells 5,000 shares of treasury stock at $33 per share.

In its first year of operations, Finishing Touches has net income of $148,000 and pays dividends at the end of the year of $95,000 ($1 per share) on all common shares outstanding and $1,440 on all preferred shares outstanding.

Required:

Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Explanation

Retained earnings: $148,000 ($95,000 + $1,440) = $51,560