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Question:
Jansen Co., a manufacturer of high-end sports equipment, earned $45 million in net income for the year. The company paid out $1.30 per share in dividends. Jansen issued 500,000 shares at the beginning of the year at $20 (1 million shares were outstanding before the issuance). The market value of Jansen's trading securities decreased by $2.4 million. The increase in Jansen's stockholders' equity is closest to:
A
$53 million.
explanation
The unrealized loss on trading securities is reflected in net income. The total change in stockholder's equity is: $45,000,000 − [(1,000,000 + 500,000 shares) x $1.3/share] + (500,000 x $20/share) = $53,050,000
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