Ladder Distributors
The stockholders' equity section of the December 31, 2019, balance sheet is provided below:
Assume that all of the 20,000 shares of stock that was issued as of December 31, 2019, was issued for $42 per share. On March 1, 2020, the company reacquired 4,000 shares of its common stock for $50 per share.
-Refer to Ladder Distributors. What is the total amount of stockholders' equity that will be presented on the company's March 31, 2020, balance sheet?

Question

Ladder Distributors
The stockholders' equity section of the December 31, 2019, balance sheet is provided below:
  Assume that all of the 20,000 shares of stock that was issued as of December 31, 2019, was issued for $42 per share. On March 1, 2020, the company reacquired 4,000 shares of its common stock for $50 per share.
-Refer to Ladder Distributors. What is the total amount of stockholders' equity that will be presented on the company's March 31, 2020, balance sheet?

Quizplus · Accepted Answer

To calculate the total amount of stockholders' equity that will be presented on Ladder Distributors' March 31, 2020, balance sheet, we need to consider the effect of the company reacquiring its own shares, also known as treasury stock.
Here's the information we have:
- The company originally issued 20,000 shares at $42 per share.
- On March 1, 2020, the company reacquired 4,000 shares at $50 per share.
First, let's calculate the total equity before the reacquisition of shares:
20,000 shares * $42 per share = $840,000
This is the contributed capital from the shares that were originally issued.
Now, let's calculate the cost of the reacquired shares:
4,000 shares * $50 per share = $200,000
When a company reacquires its own shares, it records the cost of these shares as treasury stock, which is a contra equity account. This means it reduces the total stockholders' equity.
Therefore, we subtract the cost of the treasury stock from the total equity to find the new total stockholders' equity:
$840,000 (original equity) - $200,000 (treasury stock) = $640,000 (new total stockholders' equity)
However, the provided answer choices do not match this calculation, which suggests that there may be additional information or components of stockholders' equity that are not included in the question as it was presented. Typically, the stockholders' equity section of a balance sheet includes contributed capital, retained earnings, and treasury stock, among other possible items.
Without the complete stockholders' equity section from the December 31, 2019, balance sheet, we cannot accurately determine the total amount of stockholders' equity for March 31, 2020. To provide a correct answer, we would need the full details of the stockholders' equity section, including the retained earnings and any other adjustments that may have occurred between December 31, 2019, and March 31, 2020.

Ladder Distributors The Stockholders' Equity Section of the December 31, 2019, Balance