Question

A company reported total stockholders' equity of $546,000 on its balance sheet dated December 31, 2018. During the year ended December 31, 2019, the company reported net income of $60,600, declared and paid a cash dividend of $18,600, declared and distributed a 10% stock dividend with a $15,600 total market value, issued additional common stock for $76,000, and resold treasury stock for $15,600 that it had purchased in 2018 for $12,600. What is total stockholders' equity as of December 31, 2019?

Answer 1

$667,000

Step-by-step explanation:

The computation of the total stockholder equity as on Dec 31, 2019 is shown below:

= Total stockholder equity balance reported + net income - cash dividend paid + additional common stock issued - purchased of treasury stock + sale of treasury stock

= $546,000 + $60,600 - $18,600 + $76,000 - $12,600 + $15,600

= $667,000

The cash dividend, purchase of treasury stock reduced the balance of stockholder equity and the same is deducted and the other items increased the balance of stockholder equity so the same is added