Question

Marigold Corp. began the year 2022 with $98300 in its Common Stock account and a debit balance in Retained Earnings of $42100. During the year, the company earned net income of $21100, and declared and paid $7000 of dividends. In addition, the company sold additional common stock amounting to $25700. Based on this information, what should the transaction analysis show for total stockholders' equity at the end of 2022? a. $128600 b. $180200 c. $194200 d. $96000

Answer 1

Answer:

Option (d) is correct.

Explanation:

Given that,

Beginning common stock = $98,300

Common stock sold = $25,700

Beginning balance of retained earnings = ($42,100)

Net Income = $21,100

Dividends  = $7,000

Ending balance of common stock:

= Beginning common stock + Common stock sold

= $98,300 + $25,700

= $124,000

Ending balance of retained earnings:

= Beginning balance + Net Income - Dividends

= ($42,100) + $21,100 - $7,000

= $28,000 debit

Ending balance of total stockholder's equity account:

= Ending balance of common stock + Ending balance of retained earnings

= $124,000 - $28,000

= $96,000