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A company reported total stockholders' equity of $340,000 on its balance sheet dated December 31, 2018. During the year ended December 31, 2019, the company reported net income of $40,000, declared and paid a cash dividend of $8,000, declared and distributed a 10% stock dividend with a $10,000 total market value, issued additional common stock for $60,000, and paid $12,000 to purchase treasury stock. What is total stockholders' equity as of December 31, 2019

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Answer:

$420,000

Explanation:

According to the question for computation of total stockholders' equity first we need to find out the addition to retained earning during 2019 which is shown below:-

Addition to retained earnings during 2019 = Net income - Cash dividend - Stock dividend

= $40,000 - $8,000 - $10,000

= $22,000

Total stockholders equity at December 31, 2019 = Stockholders equity, December 31, 2018 + Addition to retained earnings during 2019 + Stock dividend + Issue of new common stock - Purchase of Treasury stock

= $340,000 + $22,000 + $10,000 + $60,000 - $12,000

= $432,000 - $12,000

= $420,000

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