Question

Cox Corporation was organized on January 1, 2003, at which date it issued 100,000 shares of $10 par common stock at $15 per share. During the period January 1, 2003, through December 31, 2005, Cox reported net income of $450,000 and paid cash dividends of $230,000. On January 10, 2005, Cox purchased 8,000 shares of its common stock at $4 per share. On December 31, 2005, Cox sold 6,000 treasury shares at $12 per share. What is Cox's total stockholders' equity at December 31, 2005?

Answer 1

Answer: $1,760,000

Step-by-step explanation:

Total Shareholder Equity = Common share + Net Income - Dividends - Treasury stock

Common share

= 100,000 * 15

= $1,500,000

Net Treasury Stock

= Treasury stock bought - Treasury stock sold

= (8,000 * 4) - (6,000 * 12)

= 32,000 - 72,000

= -40,000

Total Shareholder Equity = Common share + Net Income - Dividends - Treasury stock

= 1,500,000 + 450,000 - 230,000 - (40,000)

= 1,500,000 + 220,000 + 40,000

= $1,760,000