Question

On January 1, 20A, two individuals invested $200,000 each to form Reiner Corporation. Reiner had total revenues of $20,000 during 20A and $50,000 during 20B. Total expenses for the same periods were $12,000 and $36,000 respectively. Cash dividends paid out to stockholders totaled $6,000 in 20A and $10,000 in 20B. What was Reiner's total stockholders' equity at the end of 20A and 20B

Answer 1

Answer:

Reiner Corporation

                                            Year 20A        Year 20B

Total stockholders' equity $402,000       $406,000

Explanation:

a) Data and Calculations:

Stockholders' Equity:

                                Year 20A       Year 20B

Common stock      $400,000       $400,000

Retained earnings:      2,000              6,000

Total stockholders'

equity                   $402,000       $406,000

Income Statement:  Year 20A       Year 20B

Sales revenue           20,000           50,000

Total expenses          12,000           36,000

Net income               $8,000          $14,000

Retained earnings statement:

                                               Year 20A       Year 20B

Beginning retained earnings    $0                  $2,000

Net income                               $8,000          $14,000

Dividends                                    6,000            10,000

Ending retained earnings        $2,000           $6,000