Respuesta :
Answer:
Total stockholders' equity is $994,000
Explanation:
The total stockholders' equity is made up of common stock par value plus the paid-in capital in excess of par plus net income for the year:
Midtown Inc,Balance sheet extract for the year ended 31st 2018
Common stock par value($1*40,000) $40,000
Paid-in capital in excess of par($23-$1)*40,000 $880,000
net income(retained earnings) $74,000
Total stockholders' equity $994,000
The net income is included because the net income it adds to the retained earnings for the company as the retained earnings belong to the real owners of the business, the stockholders
Answer:
$994,000
Explanation:
The shareholders equity is usually made up of the common stock and the retained earnings which is the accumulated balance of the company's net income/loss net of dividend paid over the years of operations of the entity.
However, an additional component of the shareholder's equity is the share premium which is the excess amount paid for the company's shared over the par value.
Common stock = $1.00 × 40,000
= $40,000
Share premium = ($23 - $1) × 40,000
= $880,000
total shareholder's equity = $40,000 + $880,000 + $74,000
= $994,000
