Question

Houghton Company has the following items: common stock, $1,790,000; treasury stock, $210,000; income taxes payable, $280,000; and retained earnings, $870,000. What is the total amount Houghton Company should report as shareholders' equity?

Answer 1

Answer:$2,450,000

Explanation:

The common stock net of the treasury stock is captured as equity.

The tax payable of $280,000 is a liability and not equity.

$1,790,000-$210,000+$870,000 =$2,450,000