Roberto Corporation was organized on January 1, 2011. The firm was authorized to

Question

Roberto Corporation was organized on January 1, 2011. The firm was authorized to issue 100,000
shares of $5 par common stock. During 2011, Roberto had the following transactions relating to
shareholders' equity:
Issued 10,000 shares of common stock at $7 per share.

Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.
Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).

What is total shareholders' equity at the end of 2011?

A. $250,000
B. $300,000
C. $200,000
D. $270,000

Explanation / Answer

Solution:

Shareholder's Equity= Common Stock+Retained Earnings- Treasury Stock

Now,Common Stock = 10000*7 + 20000*8 =2,30,000

Retained Earnings = Net Income - Dividends paid

= 1,00,000-50,000= 50,000

Treasury Stock = 30,000

Therefore, Shareholder'sEquity = 2,30,000+50,000-30,000= 2,50,000   

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

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