Computing rate of return on common stockholders’ equityLaSalle Exploration Company reported these figures for 2018 and 2017:Compute rate of return on common stockholders’ equity for 2018 assuming no dividends were declared or paid to preferred stockholders. 20182017Income Statement-partial:Net Income$ 14,800$ 19,200Dec. 31, 2018Dec. 31, 2017Balance Sheet-partial:$ 323,000$ 2,100$ 314,000$ 2,100Total AssetsPreferred StockCommon Stock178,000168,000Retained Earnings11,0007,000Total Stockholders' Equity$ 191,100$ 177,100

Average common stockholders equity = (Common stock for 2017 and 2018 + Retained earnings for 2017…

2018 2017 Income Statement-partial: Net Income $ 14,800 $ 19,200 Dec. 31, 2018 Dec. 31, 2017 Balance Sheet-partial: $ 323,000 $ 2,100 $ 314,000 $ 2,100 Total Assets Preferred Stock Common Stock 178,000 168,000 Retained Earnings 11,000 7,000 Total Stockholders' Equity $ 191,100 $ 177,100

2018 2017 Income Statement-partial: Net Income $ 14,800 $ 19,200 Dec. 31, 2018 Dec. 31, 2017 Balance Sheet-partial: $ 323,000 $ 2,100 $ 314,000 $ 2,100 Total Assets Preferred Stock Common Stock 178,000 168,000 Retained Earnings 11,000 7,000 Total Stockholders' Equity $ 191,100 $ 177,100

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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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Computing rate of return on common stockholders’ equity

LaSalle Exploration Company reported these figures for 2018 and 2017:

Compute rate of return on common stockholders’ equity for 2018 assuming no dividends were declared or paid to preferred stockholders.

2018
2017
Income Statement-partial:
Net Income
$ 14,800
$ 19,200
Dec. 31, 2018
Dec. 31, 2017
Balance Sheet-partial:
$ 323,000
$ 2,100
$ 314,000
$ 2,100
Total Assets
Preferred Stock
Common Stock
178,000
168,000
Retained Earnings
11,000
7,000
Total Stockholders' Equity
$ 191,100
$ 177,100

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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