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

Question

As of December 31, 2016, Warner Corporation reported the following: Dividends payable $25,000 Treasury stock 650,000 Paid-in capital - share repurchase 25,000 Other paid-in capital accounts 4,500,000 Retained earnings $3,500,000 During 2017, half of the treasury stock was resold for $250,000; net income was $650,000; cash dividends declared were $1,550,000; and stock dividends declared were $550,000. What would shareholders' equity be as of December 31, 2017?

A. $5,050,000.

B. $7,725,000.

C. $6,800,000.

D. $6,725,000.

Explanation / Answer

Answer Option D $6,725,000

Paid in Capital Share re purchase Other Paid in Capital Accounts Retained Earnings Treasury Stock (Dr) Cr Total 31-12-2016 25000 4500000 3500000 -650000 7375000 Sale of reasury Stock -25000 -50000 325000 250000 Net Income 650000 650000 Cash Dividends -1550000 -1550000 Stock Dividends 550000 -550000 0 5050000 2000000 -325000 6725000

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