Question

The Adkins Corporation’s December 31, 20x4, balance sheet had a Common Stock balance of $975,000 and a Retained Earnings balance of $535,000. The cash budget for 20x5 shows payment of dividends of $24,375 and purchase of $100,000 of the corporation’s own stock to be used for stock options for key employees. The budgeted income statement shows net income for 20x5 of $127,000. Determine the total stockholders’ equity on the budgeted balance sheet at December 31, 20x5.

Answer 1

$1,512,625

Step-by-step explanation:

The computation of the total stockholders’ equity is shown below:

= Common stock balance + retained earnings balance + net income - dividend paid - purchase of common stock

= $975,000 + $535,000 + $127,000 - $24,375 - $ $100,000

= $1,512,625

We added the Common stock balance, retained earnings balance, net income and deducted the dividend paid and purchase of common stock so that the accurate amount can come.