Question

As of December 31, 2021, Warner Corporation reported the following: Cash dividends payable $ 20,000 Treasury stock 600,000 Paid-in capital—share repurchase 20,000 Common stock and other paid-in capital accounts 4,000,000 Retained earnings 3,000,000 What was shareholders' equity as of December 31, 2021?

Answer 1

Shareholders' equity for Warner Corporation as of December 31, 2021, was calculated by adding common stock, paid-in capital, and retained earnings, then subtracting treasury stock and cash dividends payable, resulting in $6,400,000.

Step-by-step explanation:

The student has asked what the shareholders' equity was for Warner Corporation as of December 31, 2021. To calculate shareholders' equity, we need to sum up total equity components which typically include common stock, paid-in capital, and retained earnings, and then subtract treasury stock, which is the corporation's stock that it has reacquired. In this case, the shareholders' equity can be calculated as follows:

• Common stock and other paid-in capital accounts: $4,000,000
• Additional paid-in capital—share repurchase: $20,000
• Retained earnings: $3,000,000
• Less: Treasury stock: $600,000
• Less: Cash dividends payable: $20,000 (Note: This is often considered a liability and typically subtracted from total equity to reflect the obligation)

So, the calculation is $4,000,000 + $20,000 + $3,000,000 - $600,000 - $20,000 = $6,400,000 which represents the shareholders' equity for Warner Corporation on that date.