Question

Wendell Company provided the following pertaining to its recent year of operation:

• Common stock with a $10,000 par value was sold for S50,000 cash.
• Cash dividends totaling S20,000 were declared, of which S15,000 were paid.
• Net income was S70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a S5,OOO par value and a S23,000 market value.
• Treasury stock costing 9,000 was sold for $7,000.
How much did Wendell's total stockholders' equity increase during the recent year of operation?

A. S107,000.
B. $84,000.
c. S98,000.
D. $112,000.

Answer 1

Option (B) is correct.

Step-by-step explanation:

Wendell's total stockholders' equity increase during the recent year of operation:

= Issued common stock - Cash dividend declared + Net Income - Stock dividend distributed + Sale of treasury stock below cost

= $50,000 - $20,000 + $70,000 - $23,000 + $7,000

= $84,000

Therefore, Wendell's total stockholders' equity increase by $84,000.