Problem 22-13 (AICPA Adapted)
Nerve Company was organized on January 1, 2017. On the date, the entity issued 200,000 P10 par shares at P15 per share. During the period January 1, 2017, the December 31, 2018, the entity reported net income of P750,000 and paid cash dividends of P380,000.
On January 5, 2018, the entity purchased 12,000 treasury shares at P12 per share. On December 31, 2018, 8.000 treasury shares were sold at P8 per share and retired the remaining 4,000 shares.
What is the shareholders' equity on December 31, 2018?
a. 3,290,000 b. 3,306,000 c. 3,388,000 d. 8,870,000
Homework Answers
Ans:The correct option for the answer is option A i.e. $3,290,000
Shareholder equity on Dec 31,2018
| Particulars | Amount($) |
| Stockholder equity | |
| Issuance of stock | 3,000,000 |
| Net income | 750,000 |
| Cash dividends | (380,000) |
| Purchase of stock(12,000*12) | (144,000) |
| Reissuance of stock(8000*12) | 96,000 |
| Reissuance(8000*12-{8000*8} | (32,000) |
| Total stockholder equity | $3,290,000 |
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