Lerner Company had the following transactions in 2016,its first year of operations.
? Issued 25,000 ordinary shares.The issue price of the shares was $18.00 per share.
? Issued 1200 preference shares for $200 per share.
? Earned net profit of $36,000.
? Paid no dividends.
At the end of 2016,what is the total amount of shareholders' equity?

Question

Lerner Company had the following transactions in 2016,its first year of operations.
 ? Issued 25,000 ordinary shares.The issue price of the shares was $18.00 per share.
? Issued 1200 preference shares for $200 per share.
? Earned net profit of $36,000.
? Paid no dividends.
At the end of 2016,what is the total amount of shareholders' equity?

Quizplus · Accepted Answer

To calculate the total amount of shareholders' equity, we need to add the amounts from the two types of shares issued and the net profit earned.

Common shares: 
25,000 x $18 = $450,000

Preference shares: 
1,200 x $200 = $240,000

Net profit: 
$36,000

Total shareholders' equity: 
$450,000 + $240,000 + $36,000 = $726,000

Therefore, the correct answer is option D, which is $726,000.

Lerner Company Had the Following Transactions in 2016,its First Year