Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 100,000 shares of $6 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $8 per share. Issued 20,000 shares of common stock at $9 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,500 shares of treasury stock at $11 (part of the 20,000 shares issued at $9). What is total stockholders' equity at the end of 2021?

Question

Adrien Ritter

Business

9 May, 20:19

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 100,000 shares of $6 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $8 per share. Issued 20,000 shares of common stock at $9 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,500 shares of treasury stock at $11 (part of the 20,000 shares issued at $9). What is total stockholders' equity at the end of 2021?

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Matthew · Answer 1

The total stockholders' equity at the end of 2021 is $271,500

Explanation:

In order to calculate the total stockholders' equity at the end of 2021 we would have to use the following formula:

Stockholders' equity=Common stock + Paid-in capital in excess of par + Net income-Dividends - Treasury stock

Common stock = (10,000*$6 + 20,000*$6) = $180,000

Paid-in capital in excess of par = (10,000 * ($8-$6) + 20,000 * ($9-$6) = $ 80,000 Treasury stock = (3,500 * $11) = $38,500

Therefore, Stockholders' equity = $180,000+$ 80,000 + $100,000-$ 50,000 - $38,500

Stockholders' equity = $271,500

The total stockholders' equity at the end of 2021 is $271,500