Question

Olmsted Company has the following items: common stock, $750,000; treasury stock, $105,000; deferred income taxes, $125,000 and retained earnings, $454,000. What total amount should Olmsted Company report as stockholders' equity?

a. $974,000.
b. $1,099,000.
c. $1,224,000.
d. $1,349,000.

Answer 1

The total amount that Olmsted Company should report as stockholders' equity is $974,000.

Step-by-step explanation:

To determine the total amount of stockholders' equity for Olmsted Company, we need to add the common stock, retained earnings, and subtract the treasury stock and deferred income taxes.

Common stock = $750,000

Retained earnings = $454,000

Treasury stock = -$105,000 (Note the negative sign)

Deferred income taxes = -$125,000 (Note the negative sign)

Total stockholders' equity = Common stock + Retained earnings + Treasury stock + Deferred income taxes

Total stockholders' equity = $750,000 + $454,000 - $105,000 - $125,000

Total stockholders' equity = $974,000

Therefore, Olmsted Company should report a total amount of $974,000 as stockholders' equity.