Milton,Inc.had the following transactions in 2019,its first year of operations: • Issued 8000 shares of common stock.Stock has par value of $0.01 per share and was issued at $40.00 per share.
• Earned net income of $200,000.
• Paid dividends of $8.00 per share.
At the end of 2019,what is total stockholders' equity?
A) $320,000
B) $456,000
C) $136,000
D) $584,000

Question

Quizplus · Accepted Answer

Total stockholders' equity can be calculated as follows:

Common stock: (8000 shares x $0.01 par value) = $80
Additional paid-in capital: (8000 shares x $39.99 issue price) = $319,920
Retained earnings: $200,000 - (8000 shares x $8.00 dividend per share) = $136,000

Total Stockholders' Equity = Common Stock + Additional Paid-in Capital + Retained Earnings
= $80 + $319,920 + $136,000
= $456,000