Question

On January 1, 20A, two individuals invested $200,000 each to form Reiner Corporation. Reiner had total revenues of $20,000 during 20A and $50,000 during 20B. Total expenses for the same periods were $12,000 and $36,000 respectively. Cash dividends paid out to stockholders totaled $6,000 in 20A and $10,000 in 20B. What was Reiner's total stockholders' equity at the end of 20A and 20B

Answer 1

Reiner Corporation

Year 20A Year 20B

Total stockholders' equity $402,000 $406,000

Step-by-step explanation:

a) Data and Calculations:

Stockholders' Equity:

Year 20A Year 20B

Common stock $400,000 $400,000

Retained earnings: 2,000 6,000

Total stockholders'

equity $402,000 $406,000

Income Statement: Year 20A Year 20B

Sales revenue 20,000 50,000

Total expenses 12,000 36,000

Net income $8,000 $14,000

Retained earnings statement:

Year 20A Year 20B

Beginning retained earnings $0 $2,000

Net income $8,000 $14,000

Dividends 6,000 10,000

Ending retained earnings $2,000 $6,000