On January 1, Gucci Brothers Inc. started the year with a $705,000 balance in Retained Earnings and a $608,000 balance in common stock. During the year, the company reported net income of $93,000, paid a dividend of $14,100, and issued more common stock for $22,500. What is total stockholders' equity at the end of the year.

Question

Leo Mitchell

Business

15 December, 15:59

On January 1, Gucci Brothers Inc. started the year with a $705,000 balance in Retained Earnings and a $608,000 balance in common stock. During the year, the company reported net income of $93,000, paid a dividend of $14,100, and issued more common stock for $22,500. What is total stockholders' equity at the end of the year.

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Answers (1)

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Donna Christian · Answer 1

Stockholder Equity = $1,414,400

Explanation:

Stockholder Equity is the owners contribution to a business and it is made up of retained earnings and stock.

Stockholder Equity = Common stock + Retained Earnings

Let's track changes in common stock

Common stock = Starting balance + New stocks issued

Common stock = 608,000 + 22,500

Common stock = $630,500

Changes in retained earnings

Retained earnings = Starting balance + Income earned - Dividend paid out

Retained earnings = 705,000 + 93,000 - 14,100

Retained earnings = $783,900

Therefore

Stockholder Equity = 630,500 + 783,900

Stockholder Equity = $1,414,400