Problem: Shown below are the amounts from the stockholders' equity section of the balance sheets of Wasson Corporation for the years ended December 31, 2010 and 2011.
2011 2010
Stockholders' equity:
Capital Stock $50,000 $30,000
Retained Earnings $200,000 $180,000
Total stockholders' equity $250,000 $210,000
Q1. Calculate the amount of additional investment that the stockholders made during 2011.
Q2. Assuming that the corporation declared and paid $10,000 in dividends during 2011, calculate the amount of net income earned by the corporation during 2011.
Q3. Explain the significance of the $200,000 balance of retained earnings at December 31, 2011.