Question

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 170,000 shares of $6 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity: Issued 17,000 shares of common stock at $8 per share. Issued 34,000 shares of common stock at $9 per share. Reported a net income of $170,000. Paid dividends of $85,000. Purchased 3,500 shares of treasury stock at $11 (part of the 34,000 shares issued at $9). What is total stockholders' equity at the end of 2021? a. $930,500. b. $522,500. c. $488,500. d. $1,100,500.

Answer 1

c. $488,500

Step-by-step explanation:

The computation of the total stockholder equity at the end of 2021 is given below:

Common stock issued (17000 × 8) $136,000.00

Another common stock issue (34000 × 9) $306,000.00

Net income $170,000.00

Less: Dividends $(85,000.00)

Less: Treasury stock purchase (3500 × 11) ($38,500.00)

Total Stock holder equity $488,500.00