Question

Presented below is the stockholders' equity section of Oaks Corporation at December 31, 2012:

Common stock, par value $20; authorized 75,000 shares;issued and outstanding 45,000 shares $ 900,000Paid-in capital in excess of par value 250,000Retained earnings 300,000$1,450,000During 2013, the following transactions occurred relating to stockholders' equity:3,000 shares were reacquired at $28 per share.3,000 shares were reacquired at $35 per share.1,800 shares of treasury stock were sold at $30 per share.

For the year ended December 31, 2013, Oaks reported net income of $450,000. Assuming Oaks accounts for treasury stock under the cost method, what should it report as total stockholders' equity on its December 31, 2013, balance sheet?

a. $1,765,000.
b. $1,761,400.
c. $1,757,800.
d. $1,315,000.

Answer 1

a. $1,765,000

Step-by-step explanation:

Total stockholder’s equity on December 31, 2013 = Total equity at end 2012 – amount paid for 3,000 shares were reacquired at $28 per share – amount paid for 3,000 shares were reacquired at $35 per share + amount collect from 1,800 shares of treasury stock were sold at $30 per share + net income of $450,000

= $1,450,000 – 3,000 * $28 – 3,000 * $35 + 1,8000 *$30 + $450,000 = $1,765,000