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23 December, 15:07

Roberto Designers was organized on January 1, 2018. The firm was authorized to issue 140,000 shares of $5 par value common stock. During 2018, Roberto had the following transactions relating to stockholders' equity: Issued 14,000 shares of common stock at $7 per share. Issued 28,000 shares of common stock at $8 per share. Reported a net income of $140,000. Paid dividends of $70,000. Purchased 4,000 shares of treasury stock at $10 (part of the 28,000 shares issued at $8). What is total stockholders' equity at the end of 2018?

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  1. 23 December, 15:20
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    The total stockholder's equity at the end of the year will be $352,000.

    Explanation:

    The issue of common stock at $7/share = 14,000*$7=$98,000

    The issue of common stock at $8/share = 28,000*$8=$224,000

    The net income is $140,000.

    The dividends paid = $70,000.

    Purchase of treasury stock = 4000*$10=$40,000

    The total stockholder's equity

    =The issue of common stock at $7/share+The issue of common stock at $8/share+The net income-The dividends paid-Purchase of treasury stock

    =$98,000+$224,000+$140,000 - $70,000-$40,000

    =$352,000.
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