Final answer:
After Just in Thyme, Inc. repurchases shares for $10,000, the total stockholders' equity decreases from the original $100,000 balance by the repurchase amount, resulting in a new total stockholders' equity of $90,000.
Step-by-step explanation:
The Just in Thyme, Inc., has equity balances on December 31, 2018, that include common stock of $20,000, additional paid-in capital of $30,000, and retained earnings of $50,000. When the company repurchases shares of its stock for $10,000, the total stockholders' equity balance would decrease by that amount. Thus, the new total stockholders' equity balance would be the sum of the existing equity balances minus the $10,000 spent on the share buyback:
- Common Stock: $20,000
- Additional Paid-in Capital: $30,000
- Retained Earnings: $50,000
- Less: Share Repurchase: -$10,000
The calculation is as follows:
$20,000 (Common Stock) + $30,000 (Additional Paid-in Capital) + $50,000 (Retained Earnings) - $10,000 (Share Repurchase) = $90,000 total stockholders' equity.
Therefore, the correct answer is b. $90,000.