Question

A company reported total stockholders' equity of $540,000 on its balance sheet dated December 31, 2016. During the year ended December 31, 2017, the company reported net income of $60,000, declared and paid a cash dividend of $18,000, declared and distributed a 10% stock dividend with a $15,000 total market value, issued additional common stock for $70,000, and resold treasury stock for $15,000 that it had purchased in 2016 for $12,000. What is total stockholders' equity as of December 31, 2017

Answer 1

Answer:

$667,000

Explanation:

stockholders' equity December 31, 2016 = $540,000

plus net income = $60,000

minus cash dividends = ($18,000)

plus issuance of common stock = $70,000

plus sale of treasury stock = $15,000

stockholders' equity = $667,000

Stock dividends do not affect the value of stockholders' equity, that is why they are not included in this calculation.