In: Accounting
Sheffield Inc. was authorized to issue 100000 £10 par value
ordinary shares. As of December 31, 2020, the company had issued
54000 shares at an average price of £22 per share. During 2020, the
company felt that the shares were undervalued so it purchased 9800
treasury shares at £16 per share. When the share price rebounded
later in the year, the company sold 4200 of the treasury shares for
£24 per share. Retained earnings was £1666000 at December 31,
2020.
Total equity at December 31, 2020 is
£2697200.
£2994000.
£2764400.
£2798000.
--Correct Answer = Option #4: £ 2,798,000
Common Stock | Paid in Capital | Retained Earnings | Treasury Stock | Total Stockholder's Equity | |
Bal 31 Dec 2020 | £ 1,188,000.00 | £ 1,666,000.00 | £2,854,000.00 | ||
Treasury Stock purchased | -£ 156,800.00 | -£ 156,800.00 | |||
Sale of T Stock | £ 33,600.00 | £ 67,200.00 | £ 100,800.00 | ||
Total Equity at 31 Dec 2020 | £ 1,188,000.00 | £ 33,600.00 | £ 1,666,000.00 | -£ 89,600.00 | £2,798,000.00 ANSWER |
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Working
Common Stock | Paid in Capital | Retained Earnings | Treasury Stock | |
Bal 31 Dec 2020 | =54000*22 | 1666000 | ||
Treasury Stock purchased | =-9800*16 | |||
Sale of T Stock | =4200*8 | =4200*16 |