Question

Roberto Corporation was organized on January 1, 2021. The firm was authorized to issue 91,000 shares of $5 par common stock. During 2021, Roberto had the following transactions relating to shareholders' equity: Issued 9,600 shares of common stock at $6.70 per share. Issued 20,000 shares of common stock at $10.10 per share. Reported a net income of $107,000. Paid dividends of $55,000. Purchased 3,100 shares of treasury stock at $12.10 (part of the 20,000 shares issued at $10.10). What is total shareholders' equity at the end of 2021

Answer 1

The total shareholders' equity at the end of 2021 is $465,830

Step-by-step explanation:

Treasury stock = Shares purchased * Purchase price

Treasury stock = 3,100 shares $12.10 per share

Treasury stock = $37,510

Shareholder′ s equity = Equity capital + Net income - Dividend - Treasury stock

Shareholder′ s equity = $266,320 + $107,000 + $55,000 + $37,510

Shareholder′ s equity = $465,830

Working

Equity capital = (Shares issued × Issue Price) + (Shares issued * Issue price)

Equity capital = (9,600 * $6.70) + (20,000 * $10.10)

Equity capital = $64,320 + $202,000

Equity capital = $266,320