Question

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 100,000 shares of $6 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $8 per share. Issued 20,000 shares of common stock at $9 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,500 shares of treasury stock at $11 (part of the 20,000 shares issued at $9). What is total stockholders' equity at the end of 2021?

Answer 1

Answer:

The total stockholders' equity at the end of 2021 is $271,500

Explanation:

In order to calculate the total stockholders' equity at the end of 2021 we would have to use the following formula:

Stockholders' equity=Common stock+ Paid-in capital in excess of par+ Net income-Dividends- Treasury stock

Common stock= ( 10,000*$6 + 20,000*$6 ) = $180,000  

Paid-in capital in excess of par=(10,000*($8-$6) + 20,000*($9-$6)=$ 80,000   Treasury stock= ( 3,500 * $11 )=$38,500

Therefore, Stockholders' equity= $180,000+$ 80,000 + $100,000-$ 50,000 - $38,500    

Stockholders' equity= $271,500

The total stockholders' equity at the end of 2021 is $271,500