Lerner Company had the following transactions in 2015, its first year of operations. • Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share.
• Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par.
• Earned net income of $35,000.
• Paid no dividends.
At the end of 2015, what is the total amount of stockholders' equity?
A)$415,000
B)$120,000
C)$260,000
D)$380,000

Question

Quizplus · Accepted Answer

The total stockholders' equity is calculated as follows: Common stock issued = 20,000 shares * $1 par value = $20,000. Additional paid-in capital from common stock = 20,000 shares * ($14 - $1) = $260,000. Preferred stock issued = 1,000 shares * $100 par value = $100,000. Net income = $35,000. Total stockholders' equity = $20,000 + $260,000 + $100,000 + $35,000 = $415,000.

Lerner Company Had the Following Transactions in 2015, Its First