Use the incomplete stockholders\' equity section of Vargas Company’s balance she

ID: 2458689 • Letter: U

Question

Use the incomplete stockholders' equity section of Vargas Company’s balance sheet as of December 31, 2015, to answer the following question.

Common stock, $7 par, 100,000 shares authorized

$700,000

Additional paid in capital—common

160,000

Retained earnings

Treasury stock (2,000 shares at cost)

(16,000)

Total stockholders' equity

974,000

What is the amount of Vargas’ retained earnings?

$130,000

$98,000

$860,000

$114,000

Common stock, $7 par, 100,000 shares authorized

$700,000

Additional paid in capital—common

160,000

Retained earnings

Treasury stock (2,000 shares at cost)

(16,000)

Total stockholders' equity

974,000

What is the amount of Vargas’ retained earnings?

Total stockhoilders' equity = Common stock + Additional paid in capital + Retained earnings - Treasury stock

Or,

$974,000 = $700,000 + $160,000 + Retained earnings - $16,000

Or,

Retained earnings = $974,000 - $700,000 - $160,000 + $16,000

Or,

Retained earings = $130,000

Therefore, A is the correct answer.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.