Question

Roberto Corporation was organized on January 1, 2018. The firm was authorized to issue 87,000 shares of $5 par common stock. During 2018, Roberto had the following transactions relating to shareholders' equity: Issued 10,800 shares of common stock at $5.70 per share. Issued 19,800 shares of common stock at $8.70 per share. Reported a net income of $101,000. Paid dividends of $52,000. Purchased 2,700 shares of treasury stock at $10.70 (part of the 19,800 shares issued at $8.70). What is total shareholders' equity at the end of 2018

Answer 1

$259,330

Step-by-step explanation:

Total shareholders equity are all monies provided by the shareholders including reserves set aside for them. The total shareholders' equity is determined as follows :

Total shareholders' equity = Common Stocks + Retained Earnings

Common Stocks Outstanding Calculation

Issued Shares (1st Issue) (10,800 x $5.70) $61,560

Issued Shares (2nd Issue) ( 19,800 × $8.70) $172,260

Repurchase ( 2,700 × $8.70) ($23,490)

Total Equity $210,330

Retained Earnings Calculation

Opening Balance $ 0

Add Profit for the Year $101,000

Less Dividends ($52,000)

Ending Balance $49,000

Therefore,

Total shareholders' equity = $210,330 + $49,000

= $259,330