Trend Co Ltd was set up in 2013 with share capital of $1 000 000.In year 1 a loss of $200 000 was recorded,in year 2 a profit of $50 000 and in year 3 a profit of $450 000.Also in year 3 a dividend of 2% of paid up capital was paid to shareholders and $30 000 was transferred from retained earnings to a general reserve.The shareholder's equity of Trend Co Ltd at the end of year 3 was:

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The shareholder's equity at the end of year 3 is calculated as follows: Starting with the initial share capital of $1,000,000, subtract the year 1 loss of $200,000, add the year 2 profit of $50,000, and add the year 3 profit of $450,000. This results in $1,300,000. From this, subtract the dividend of 2% of $1,000,000 ($20,000) and the transfer to the general reserve of $30,000. This results in a final shareholder's equity of $1,280,000.

Trend Co Ltd Was Set Up in 2013 with Share