Question

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 170,000 shares of $7 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity:Issued 17,000 shares of common stock at $9 per share.Issued 34,000 shares of common stock at $10 per share.Reported a net income of $170,000.Paid dividends of $85,000.Purchased 3,000 shares of treasury stock at $12 (part of the 34,000 shares issued at $10).What is total stockholders' equity at the end of 2021?

Answer 1

Total stockholders' equity at the end of 2021= $542,000

Step-by-step explanation:

Total stockholder equity = Common stock balance plus additional Issued Capital balance + Retained earnings.

Authorized Share Capital 170,000 @ $7 $1,190,000

Issued 17000 Common Stock @$9

Common Stock 17,000@$7 $119,000

Additional Issued Capital 17,000@$2 $34,000 $153,000

Issued 34,000 Common Stock @$10

Common Stock 34,000@$7 $238,000

Additional Issued Capital 34,000@$3 $102,000 $340,000

Sub-Total $493,000

Less: Shares repurchased 3000@$12 ($36,000)

$457,000

Net income $170,000

Less: Dividend $85,000

Retained earnings $85,000

Stockholders' Equity $542,000