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Quick Fix-It Corporation was organized at the beginning of this year to operate several car repair businesses in a large metropolitan area. The charter issued by the state authorized the following stock:
Common stock, $14 par value, 99,100 shares authorized
Preferred stock, $46 par value, 8 percent, 59,300 shares authorized
During January and February of this year, the following stock transactions were completed:
a. Sold 78,900 shares of common stock at $28 cash per share.
b. Sold 20,000 shares of preferred stock at $79 cash per share.
c. Bought 5,100 shares of common stock from a current stockholder for $16 cash per share.
Net income for the year was $90,400; cash dividends declared and paid at year-end were $31,200.
Question:
Prepare the stockholders' equity section of the balance sheet at the end of the year.

Sagot :

Stockholder's equity will be equal to $3766800, considering the value of common stock, preferred stock, additional capital and retained earnings.

common stock = $14*78,900 = $1,104,600

Preferred stock = $46*20,000 = $920,000

Add: additional paid in capital (78900 * $14 +20000 * $33) = $ 1764600

Add: retained earnings ($90400-$31200) = $59200

Less: treasury stock (5100 * $16)  = $81600

Stockholder's equity = $3766800

Equity, also known as shareholders' equity or owners' shares for privately owned businesses, is the quantity of cash which would remain in the hands of a company's shareholders in the event that all of those assets were sold off and its liabilities were fully settled. It is the worth of sales revenue less any obligations owing by the company that were not transmitted with sale inside the case of an acquisition.

Additionally, a company's book value may be represented through shareholder equity. Equity may sometimes be given in exchange for cash. Additionally, it symbolizes the proportionate holding of a company's equity.

Learn more about equity here:

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