Question

United, Inc.'s unadjusted current assets section and equity section of its December 31, Year 1, balance sheet are as follows:Current AssetsCash &n bsp; &n bsp; $ 60,000Investment in trading securities (including$300,000 of United, Inc. common stock) 400,000Trade accounts receivable 340,000Inventories 148,000Total 948,000EquityCommon Stock & nbsp; & nbsp; & nbsp; & nbsp; 2,224,000Retained earnings (deficit) &nb sp; &nb sp; (224,000)Total & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; 2,000,000The investments and inventories are reported at their costs, which approximate fair values. In its Year 1 statement of equity, United's total amount of equity at December 31, Year 1, isA. $2,000,000B. $1,924,000C. $2,224,000D $1,700,000

Answer 1

D.- 1,700,000

Step-by-step explanation:

There is an accounting mistake in the current assets and equity section of United, Inc.'s

The own common stock held are treasury stock. Thus, they decrease the equity. The aren't current assets.

The correct equity section will be disclosure as follows:

Equity

Common Stock 2,224,000

Retained earnings (deficit)(224,000)

Treasury Stock (300,000)

Total: 1,700,000