Lanier Tech This company was incorporated as a new business on January 1,2015.The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%,$10 par,cumulative,participating preferred stock.On January 1,2015,the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share.Net income for the year ended December 31,2015 was $375,000.
-Refer to Lanier Tech.Assume that no dividends were declared or paid during the first year of operations.What is the dollar amount of total stockholders' equity reported on the balance sheet at December 31,2015?

Question

Quizplus · Accepted Answer

Total stockholders' equity is the sum of the par value of the common stock, the par value of the preferred stock, and the retained earnings. The par value of the common stock is $40,000 (8,000 shares x $5 par value), the par value of the preferred stock is $20,000 (2,000 shares x $10 par value), and the retained earnings are $375,000. Therefore, the total stockholders' equity is $40,000 + $20,000 + $375,000 = $555,000.

Lanier Tech This Company Was Incorporated as a New Business