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10 January, 12:10

On January 1, 2012, Gucci Brothers Inc. started the year with a $492,000 balance in Retained Earnings and a $605,000 balance in Common Stock. During 2012, the company earned net income of $92,000, paid a dividend of $15,200, and issued more common stock for $27,500. What is total stockholders' equity on December 31, 2012?

A. $1,231,700. B.

$1,097,000. C.

$1,201,300. D.

$1,588,300

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  1. 10 January, 12:40
    0
    option (C) $1,201,300

    Explanation:

    Data provided in the question:

    Balance in retained earnings = $492,000

    Balance in Common Stock = $605,000

    Net income earned = $92,000

    Dividend paid = $15,200

    Common stocks issued = $27,500

    Now,

    Common Stock

    = Balance in Common Stock + Common stocks issued

    = $605,000 + $27,500

    = $632,500

    Retained Earnings

    = Balance in retained earnings + Net income earned - Dividend paid

    = $492,000 + $92,000 - $15,200

    = $568,800

    Total Stock Holders Equity on Dec 31,2012

    = Common Stock + Retained Earnings

    = $632,500 + $568,800

    = $1,201,300

    Hence,

    The answer is option (C) $1,201,300
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