Explore BrainMass

Explore BrainMass

    Warner Corporation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    As of December 31, 2006, Warner Corporation reported the following:

    Dividends payable 20,000
    Treasury Stock 600,000
    Paid-in capital-share repurchase 20,000
    Other paid-in capital accounts 4,000,000
    Retained earnings 3,000,000

    During 2007, half of the treasury stock was resold for $240,000; net income was $600,000; cash dividends declared were $1,500,000; and stock dividends declared were $500,000.

    1. What was shareholders' equity as of December 31, 2006?

    A. $7,020,000.
    B. $6,440,000.
    C. $6,420,000.
    D. $6,400,000.

    2. The 2007 sale of half of the treasury stock would:

    A. Reduce income before tax by $60,000.
    B. Reduce retained earnings by $60,000.
    C. Increase total shareholders' equity by $300,000.
    D. Decrease retained earnings by $40,000.

    3. What would shareholders' equity be as of December 31, 2007?

    A. Amount is not shown.
    B. $5,760,000.
    C. $5,820,000.
    D. $6,760,000.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:19 pm ad1c9bdddf
    https://brainmass.com/business/business-math/warner-corporation-226441

    Solution Preview

    As of December 31, 2006, Warner Corporation reported the following:

    Dividends payable 20,000
    Treasury Stock 600,000
    Paid-in capital-share repurchase 20,000
    Other paid-in capital accounts 4,000,000
    Retained earnings 3,000,000

    During 2007, half of the treasury stock was resold for $240,000; net income was $600,000; cash dividends declared were ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what was shareholders' equity as of December 31, 2006.

    $2.19

    ADVERTISEMENT