Question

On January 1, Gucci Brothers Inc. started the year with a $696,000 balance in Retained Earnings and a $602,000 balance in common stock. During the year, the company reported net income of $109,000, paid a dividend of $14,400, and issued more common stock for $30,000. What is total stockholders' equity at the end of the year?

Answer 1

See below

Step-by-step explanation:

Given the above information, we will first calculate the common stock

Common stock = Balance in common stock + Common stock issued

= $602,000 + $30,000

= $632,000

Retained earnings

= Balance in retained earning + Net income - dividend paid

= $696,000 + $109,000 - $14,400

= $790,600

Total stockholder equity

= Common stock + retained earning

= $632,000 + $790,600

= $1,422,600