Question

Comanic Corp. has common stock of $5,400,000, retained earnings of $2,000,000, unrealized gains on trading securities of $100,000 and unrealized losses on available-for-sale securities of $200,000. What is the total amount of its stockholders' equity?
a. $7,500,000
b. $7,200,000
c. $7,300,000
d. $7,400,000

Answer 1

Answer:

b. $7,200,000

Explanation:

Common stock of                                                            $5,400,000

Retained earnings of                                                       $2,000,000

Unrealized losses on available-for-sale securities       ($200,000)

Stockholders' Equity                                                        $7,200,000

Unrealized gains on trading securities of $100,000 is not being added to the stockholders equity because it has been charges in profit and Loss statement and it is reflected in the net Income which is already been included in retained earning. Only Unrealized losses on available-for-sale securities of 200,000 is reported in the Stockholder's equity under separate head in the balance sheet.