Ellsworth Corporation was organized on January 1, 2016. The firm was authorized to issue 150,000 shares of $1 par common stock. During 2016, Ellsworth had the following transactions relating to shareholders' equity:Issued 20,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10. What was total shareholders' equity at the end of 2016? a. $270,000. b. $350,000. c. $320,000. d. $380,000.

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Ellsworth Corporation was organized on January 1, 2016. The firm was authorized to issue 150,000 shares of $1 par common stock. During 2016, Ellsworth had the following transactions relating to shareholders' equity:Issued 20,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10. What was total shareholders' equity at the end of 2016? a. $270,000. b. $350,000. c. $320,000. d. $380,000.

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Sheena · Answer 1

c. $320,000

Explanation:

The computation of the total shareholders' equity is shown below:

Issued amount $140,000 (20,000 shares * $7)

Issued amount $160,000 (20,000 shares * $8)

Add: Reported Net income $100,000

Less : Dividend paid - $50,000

Less: Treasury stock - $30,000 (3,000 shares * $10)

Total shareholder equity $320,000

We deduct the dividend and the treasury stock and rest of the items are added