Question

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 170,000 shares of $7 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity:Issued 17,000 shares of common stock at $9 per share.Issued 34,000 shares of common stock at $10 per share.Reported a net income of $170,000.Paid dividends of $85,000.Purchased 3,000 shares of treasury stock at $12 (part of the 34,000 shares issued at $10).What is total stockholders' equity at the end of 2021?

Answer 1

Answer:

Total stockholders' equity at the end of 2021=  $542,000

Explanation:

Total stockholder equity = Common stock balance plus additional Issued Capital balance + Retained earnings.

Authorized Share Capital      170,000 @ $7           $1,190,000

Issued 17000 Common Stock @$9

Common Stock  17,[email protected]$7                          $119,000

Additional Issued Capital  17,[email protected]$2           $34,000             $153,000

 Issued 34,000 Common Stock @$10

Common Stock  34,[email protected]$7                          $238,000

Additional Issued Capital  34,[email protected]$3           $102,000             $340,000

Sub-Total                                                                                        $493,000

Less: Shares repurchased [email protected]$12                                        ($36,000)

                                                                                                      $457,000

Net income                                                          $170,000

Less: Dividend                                                      $85,000  

Retained earnings                                                                           $85,000

Stockholders' Equity                                                                       $542,000