Assignment: 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.
Q1. 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.
Q2. 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.
Q3. 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.