The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow. Stockholders’ Equity (January 1) Common stock—$5 par value, 100,000 shares authorized, 35,000 shares issued and outstanding $ 175,000 Paid-in capital in excess of par value, common stock 135,000 Retained earnings 340,000 Total stockholders’ equity $ 650,000 Stockholders’ Equity (December 31) Common stock—$5 par value, 100,000 shares authorized, 41,200 shares issued, 4,000 shares in treasury $ 206,000 Paid-in capital in excess of par value, common stock 178,400 Retained earnings ($30,000 restricted by treasury stock) 400,000 784,400 Less cost of treasury stock (30,000) Total stockholders’ equity $ 754,400 The following transactions and events affected its equity during the year. January 5 Declared a $0.50 per share cash dividend, date of record January 10. March 20 Purchased treasury stock for cash. April 5 Declared a $0.50 per share cash dividend, date of record April 10. July 5 Declared a $0.50 per share cash dividend, date of record July 10. July 31 Declared a 20% stock dividend when the stock’s market value was $12 per share. August 14 Issued the stock dividend that was declared on July 31. October 5 Declared a $0.50 per share cash dividend, date of record October 10. 5. How much net income did the company earn this year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow.

Stockholders’ Equity (January 1)
Common stock—$5 par value, 100,000 shares authorized, 35,000 shares issued and outstanding	$ 175,000
Paid-in capital in excess of par value, common stock	135,000
Retained earnings	340,000
Total stockholders’ equity	$ 650,000

Stockholders’ Equity (December 31)
Common stock—$5 par value, 100,000 shares authorized, 41,200 shares issued, 4,000 shares in treasury	$ 206,000
Paid-in capital in excess of par value, common stock	178,400
Retained earnings ($30,000 restricted by treasury stock)	400,000
	784,400
Less cost of treasury stock	(30,000)
Total stockholders’ equity	$ 754,400

The following transactions and events affected its equity during the year.

January 5	Declared a $0.50 per share cash dividend, date of record January 10.
March 20	Purchased treasury stock for cash.
April 5	Declared a $0.50 per share cash dividend, date of record April 10.
July 5	Declared a $0.50 per share cash dividend, date of record July 10.
July 31	Declared a 20% stock dividend when the stock’s market value was $12 per share.
August 14	Issued the stock dividend that was declared on July 31.
October 5	Declared a $0.50 per share cash dividend, date of record October 10.

5. How much net income did the company earn this year?

Expert Solution

Step 1

Net income is the amount of money earned by an entity. It is determined by deducting the expenses from the revenues of the entity. It is shown in the income statement of the entity.