Tandy, Incorporated, was issued a charter on January 15, 2011, that authorized the following capital stock: Common
Question:
Tandy, Incorporated, was issued a charter on January 15, 2011, that authorized the following capital stock:
Common stock, no-par, 103,000 shares
Preferred stock, 9 percent, par value $8 per share, 4,000 shares
The board of directors established a stated value on the no-par common stock of $10 per share. During 2011, the following selected transactions were completed in the order given:
a. Sold and issued 20,000 shares of the no-par common stock at $16 cash per share.
b. Sold and issued 3,000 shares of preferred stock at $20 cash per share.
c. At the end of 2011, the accounts showed net income of $40,000.
Required:
1. Prepare the stockholders’ equity section of the balance sheet at December 31, 2011.
2. Assume that you are a common stockholder. If Tandy needed additional capital, would you prefer to have it issue additional common stock or additional preferred stock? Explain.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
Req 1 Stockholders Equity Contributed capital Preferred stock authorized 4...View the full answer
