Question

On January 1, Gucci Brothers Inc. started the year with a $690,000 balance in Retained Earnings and a $597,000 balance in common stock. During the year, the company reported net income of $96,000, paid a dividend of $14,800, and issued more common stock for $20,000. What is total stockholders' equity at the end of the year?

Answer 1

Answer:

$1,388,200

Explanation:

The owner's equity which is an element of the balance sheet and the accounting equation is made up of retained earnings and common stock. Movements in the owner's/stockholder's equity include payment of dividend, net income for the year, stock issued etc.

Given;

Opening retained earnings = $690,000

Opening common stock = $597,000

Net income for the year = $96,000

Dividend paid = $14,800

Issued stock = $20,000

Total stockholders' equity at the end of the year = $690,000 + $597,000 + $96,000 - $14,800 + $20,000

= $1,388,200

Answer 2

Answer:

$1,388,200

Explanation:

The total stock holders equity as at the end of the year shall be determined as follows:

                                 Common stock   Retained Earnings      Total

Balance of Jan 1       $597,000           $690,000                $1,287,000

Net income for year                             $96,000                  $96,000

Dividend paid                                       ($14,800)                  ($14,800)

Common stock         $20,000                                               $20,000

Balance at year end  $617,000           $771,200                  $1,388,200