Tandy Company was issued a charter by the state of Indiana on January 15 of this year. The charter authorized the following:

Common stock, $8 par value, 121,000 shares authorized
Preferred stock, 9 percent, par value $8 per share, 5,300 shares authorized

During the year, the following transactions took place in the order presented:

a. Sold and issued 21,400 shares of common stock at $12 cash per share.
b. Sold and issued 2,000 shares of preferred stock at $16 cash per share.
c. At the end of the year, the accounts showed net income of $41,000. No dividends were declared.

Required:

Prepare the stockholders’ equity section of the balance sheet at the end of the year.

Tandy Company

Balance Sheet Equity Section

Common Stock (21,400 x $8)                              $171,200

Preferred Stock 9% ($2,000 x $8)                      $16,000

Add-in-capital Excess of par Common stock     $85,600

( $12 - $8) x 21,400 shares

.Add-in-capital Excess of par Common stock    $16,000

( $16 - $8) x 2,000 shares

Retained Earning                                                  $41,000

Total Equity                                                           $329,800

Explanation:

The par value and the add-in-capital which is excess from par of common and preferred shares are recorded separately.

Net Income reported in the period will be transferred to the retained earning.

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