Final answer:
The total stockholders' equity for Orlando Corporation as of December 31 of the current year is determined by adding the value of common stock issued, additional paid-in capital, and net income, then subtracting the cost of treasury stock purchased. The total stockholders' equity is $1,688,000.
Step-by-step explanation:
The total amount of stockholders' equity for Orlando Corporation as of December 31 of the current year can be determined by performing a few calculations involving the provided transactions. We'll look at the capital stock, treasury stock, and net income components individually and then combine them to find the total equity.
Firstly, Orlando Corporation issued 40,000 shares of common stock at $35 per share:
Common stock issued = 40,000 shares * $35 per share = $1,400,000.
Since the par value per share is $1, the capital contributed in excess of par will be:
Additional Paid-In Capital (APIC) = (Issue price - Par value) * Number of shares = ($35 - $1) * 40,000 shares = $1,360,000.
The value of common stock at par value will be:
Common stock at par = Par value * Number of shares = $1 * 40,000 shares = $40,000.
Next, Orlando Corporation purchased 4,000 shares of treasury stock at $28 per share:
Treasury stock = 4,000 shares * $28 per share = $112,000. (Treasury stock reduces stockholders' equity.)
Finally, the company had net income of $400,000, which increases stockholders' equity.
Net income = $400,000.
Now we can calculate the total stockholders' equity:
Total stockholders' equity = Common stock at par + APIC + Net income - Treasury stock = $40,000 + $1,360,000 + $400,000 - $112,000 = $1,688,000.