On January 1, 20B, Milburn Corporation had the following balances in its shareholders' equity accounts: Common Shares - $100,000 (10,000 shares) and Retained Earnings - $30,000. During 20B, the company issued 1,000 additional shares of common shares for
$10 per share, reported profit of $40,000, and paid cash dividends of $20,000. What amount of total shareholders' equity would the company report in its December 31, 20B, statement of financial position?
A) $180,000.
B) $140,000.
C) $120,000.
D) $160,000.

Question

Quizplus · Accepted Answer

Starting Common Shares balance: $100,000
Issued 1,000 shares at $10 per share: $10,000
Ending Common Shares balance: $110,000

Starting Retained Earnings balance: $30,000
Profit for the year: $40,000
Subtract dividends paid: ($20,000)
Ending Retained Earnings balance: $50,000

Total Shareholders' Equity: $110,000 + $50,000 = $160,000.

On January 1, 20B, Milburn Corporation Had the Following Balances