The Wadsworth Corp.has common stock with a par value of $5.During the current year,it declared and paid dividends of $10,000.It sold at $20 per share an additional 1,000 shares of stock that had not been previously issued.In addition,it had net income of $50,000 for the year.What is the amount of change to its stockholders' equity for the year?
A) $70,000
B) $45,000
C) $55,000
D) $60,000

Question

Quizplus · Accepted Answer

The change in stockholders' equity includes the net income ($50,000) and the proceeds from the sale of new shares (1,000 shares x $20 = $20,000), minus the dividends paid ($10,000). Thus, the change is $50,000 + $20,000 - $10,000 = $60,000.