Question

Yellow Enterprises reported the following ($ in thousands) as of December 31, 2024. All accounts have normal balances.

Deficit (debit balance in retained earnings) $ 2,000
Common stock 2,400
Paid-in capital—share repurchase 1,200
Treasury stock (at cost) 320
Paid-in capital—excess of par 31,900
During 2025 ($ in thousands), net income was $10,400; 25% of the treasury stock was resold for $590; cash dividends declared were $690; cash dividends paid were $480.
What ($ in thousands) was shareholders' equity as of December 31, 2025?

Answer 1

To calculate shareholders' equity as of December 31, 2025, we need to consider the changes in each component of equity during 2025. After taking into account net income, treasury stock sold, and cash dividends declared and paid, shareholders' equity is determined to be $43,450,000.

Step-by-step explanation:

Shareholders' equity represents the net worth of a company and is calculated by subtracting total liabilities from total assets. To determine shareholders' equity as of December 31, 2025, we need to calculate the changes in each component of equity during 2025.

1. Start with the beginning balance of equity:

• Common stock ($2,400) + Paid-in capital—excess of par ($31,900) = $34,300

Add net income of $10,400

• $34,300 + $10,400 = $44,700

Subtract treasury stock sold:

• 25% of $320 = $80
• $44,700 - $80 = $44,620

Subtract cash dividends declared:

• $44,620 - $690 = $43,930

Subtract cash dividends paid:

• $43,930 - $480 = $43,450

Therefore, shareholders' equity as of December 31, 2025, was $43,450,000.