Question

Roberto Corporation was organized on January 1, 2021. The firm was authorized to issue 88,000 shares of $5 par common stock. During 2021, Roberto had the following transactions relating to shareholders' equity: Issued 10,800 shares of common stock at $5.70 per share. Issued 19,300 shares of common stock at $9.70 per share. Reported a net income of $98,000. Paid dividends of $41,000. Purchased 3,500 shares of treasury stock at $11.70 (part of the 19,300 shares issued at $9.70). What is total shareholders' equity at the end of 2021

Answer 1

Answer:Shareholder's equity =$264,820

Explanation:

Purcahse of treasury stock =Shares purchased×price purchased

=3,500 shares×$11.70 per share

=$40,950

Shareholder's equity =Equity capital+Net income− Dividend−Treasury stock

Given

Net income = $98,000

  Dividends =$41,000

but Equity capital =Shares issued× the Issued price + Shares issued× the Issued price +....

= 10,800 x $5.70 + 19,300 x 9.70=61,560 + 187,210=$248,770

Shareholder's equity = $248,770 + $98,000 - $41,000 -$40,950= $264,820.

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