Milton, Inc. had the following transactions in 2019, its first year of operations:• Issued 8000 shares of common stock. Stock has par value of $0.01 per share and was issued at $40.00per share.• Earned net income of $200,000.• Paid dividends of $8.00 per share. At the end of 2019, what is total stockholders' equity? A) $320,000 B) $584,000 C) $456,000 D) $136,000

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Business

Janet Townsend

5 March, 14:53

Milton, Inc. had the following transactions in 2019, its first year of operations:• Issued 8000 shares of common stock. Stock has par value of $0.01 per share and was issued at $40.00per share.• Earned net income of $200,000.• Paid dividends of $8.00 per share. At the end of 2019, what is total stockholders' equity? A) $320,000 B) $584,000 C) $456,000 D) $136,000

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Eliezer Watts · Answer 1

C) $456,000

Explanation:

8,000 x 40 per share = 320,000 (A)

Net income 200,000

Dividends 8,000 x 8 = (64,000) (B)

Total stockholders' equity 456,000

(A) On the equity section, the stock issued will be at issued value, which is 40 per share.

(B) The dividends decrease the retained earnings, which is an equity account, therefore, it derease the stockholders' equity