Clothing Emporium was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.What is the total stockholders' equity at the end of 2018?

Question

Quizplus · Accepted Answer

Total stockholders' equity is the sum of the par value of the shares issued, additional paid-in capital, and retained earnings. In this case, the par value of the shares issued is $150,000 (30,000 shares x $5 par value + 20,000 shares x $5 par value), the additional paid-in capital is $60,000 (30,000 shares x $2 per share + 20,000 shares x $3 per share), and the retained earnings are $100,000. Therefore, the total stockholders' equity is $420,000.

Clothing Emporium Was Organized on January 1,2018