P10-86B. (Learning Objectives 2, 3, 4: Measuring the effects of share issuance, treasury share, and dividend transactions on shareholders’ equity) Rich Foods, Inc., is authorized to issue 5,000,000 shares of €3.00 par ordinary shares.

In its initial public offering during 20X0, Rich issued 500,000 shares of its €3.00 par ordinary shares for €6.00 per share. Over the next year, Rich’s share price increased, and the company issued 395,000 more shares at an average price of €9.00.

During 20X2, the price of Rich’s ordinary shares dropped to €7.25, and Rich purchased 612,000 shares of its ordinary shares for the treasury. After the market price of the ordinary share rose in 20X3, Rich sold 38,000 shares of the treasury share for €8.00 per share.

During the five years from 20X0 to 20X5, Rich earned a net income of €1,250,000 and declared and paid cash dividends of €800,000. Share dividends of €644,400 were distributed to the shareholders in 20X1, with €214,800 credited to ordinary shares and €429,600 credited to additional paid-in capital. At December 31, 20X5, total assets of the company are €14,300,000, and liabilities add up to €7,440,500.

Requirement 1. Show the computation of Rich’s total shareholders’ equity at December 31, 20X5. Present a detailed computation of each element of shareholders’ equity. Use the end-of-chapter summary problem to format your answer.