Question

a corporation reported the following on its balance sheet at december 31, 2022: total contributed capital of $186,000, treasury stock of $19,500, and total stockholder's equity of $237,500. the corporation had 1,000,000 authorized shares of its $0.01 par value common stock of which 200,000 were outstanding. during the 2023, the corporation earned net income of $75,000, issued 5,000 shares of $1 par common stock at an average market price of $44 per share, and declared dividends of $20,500. what amount was the total stockholder's equity reported on the balance sheet at the end of 2023?

Answer 1

The total stockholder's equity reported on the balance sheet at the end of 2023 is $194,500.

Step-by-step explanation:

The total stockholders' equity reported on the balance sheet at the end of 2023 can be calculated by considering the changes in contributed capital, treasury stock, net income, and dividends. First, we start with the total stockholders' equity reported at the end of 2022, which was $237,500. Then, we subtract the treasury stock of $19,500, as treasury stock is considered a reduction of stockholders' equity. This leaves us with the total contributed capital, which is $218,000 ($237,500 - $19,500).

Next, we consider the changes in stockholders' equity during 2023. The net income earned by the corporation during 2023 is $75,000, which increases the stockholders' equity. Additionally, the issuance of 5,000 shares of $1 par common stock at an average market price of $44 per share brings in additional contributed capital of $220,000 ($1 * 5,000). However, the declaration of dividends of $20,500 decreases the stockholders' equity. Subtracting the dividends from the total contributed capital gives us $194,500 ($218,000 + $75,000 - $220,000 - $20,500).

Therefore, the total stockholders' equity reported on the balance sheet at the end of 2023 is $194,500.