2) BITCOIN Ltd. began business on 20-Jan-2000 by issuing all of its 100,000 $1 p

Question

2) BITCOIN Ltd. began business on 20-Jan-2000 by issuing all of its 100,000 $1 par value authorized shares of common stock at $6 per share. On June 30, BITCOIN Ltd. declared a cash dividend of $2.75 per share. On Nov 1, BITCOIN Ltd. reacquired 20,000 of its own shares for $10 per share. On December 22, BITCOIN Ltd. resold 10,000 of these shares for $12 per share. Compute the amount of total stockholders' equity as at 31 December 2016 assuming that the net income for the year was $275,000. $420,000 O$620,000 $520,000 $400,000

Explanation / Answer

Correct answer is C

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Equity at the beginning of the year = 100000* 6 = 600000

Equity after first repurchased = 600000 – (20000*10)

                                                     = 600000 – 200000

                                                    = 400000

Equity after share issue = 400000 + 10000*12

                                       = 520000

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