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As of December 31, 2016, Warner Corporation reported the following: Divideneds p

ID: 2467864 • Letter: A

Question

As of December 31, 2016, Warner Corporation reported the following:

Divideneds payable: $20,000

Treasury stock: 600,000

Paid-in capital- share repurchase: 20,000

Other paid-in capital accounts: 4,000,000

Retained earnings: $3,000,000

During 2017, half of the treasury stock was resold for $240,000; net income was $600,000 cash dividends declared were $1,500,000; and stock dividends declared were $500,000.

What was shareholder's equity as December 31, 2016?

A.) $6,400,000

B.) $6,420,000

C.) $6,440,000

D.) $7,020,000

Explanation / Answer

The value of shareholder's equity is calculated with the use of following table:

The value of shareholder's equity as on December 31, 2016 is $6,420,000 (which is Option B)

Paid-In Capital-Share Repurchase 20,000 Other Paid-In Capital Accounts 4,000,000 Retained Earnings 3,000,000 Less Treasury Stock 600,000 Total Shareholder's Equity $6,420,000