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7 April, 05:28

Orlando Corporation incorporated on January 2 of the current year. During the year, Orlando had the following transactions: times issued 40 comma 000 shares of common stock at $ 35 per share. The par value per share is $1. times purchased 4 comma 000 shares of treasury stock at $ 28 per share times had net income of $400,000. What is the total amount of stockholders' equity as of December 31 of the current year?

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  1. 7 April, 05:43
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    The total amount of stock holder's equity will be $1,688,000.

    Explanation:

    The number of common shares issued in common stock is 40,000.

    The price per stock is $35.

    The par value per share is $1.

    The amount of treasury shares purchased is 4,000.

    The price of treasury stock is $28 per share.

    The net income is given at $400,000.

    The value of common shares at par value is $40,000.

    The paid-in capital excess of par value is

    =$40000 * (35-1)

    =$40000*34

    =$1,360,000

    The expense on treasury shares

    =4,000*$28

    =$112,000

    The total amount of stock holder's equity will be,

    =common shares at par value+paid in capital excess of par value+retained earnings-expense on treasury shares

    =$ (40,000+1,360,000+400,000-112,000)

    =$1,688,000
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