Question

At the beginning of the year (January 1), Maurice and Sons has $15,000 of common stock outstanding and retained earnings of $2,600. During the year, the company reports net income of $2,340 and pays dividends of $1,580. In addition, the company issues additional common stock for $8,700. Prepare the statement of stockholders' equity at the end of the year (December 31).

Answer 1

To prepare the statement of stockholders' equity, add the beginning common stock to new issues, add net income to retained earnings, and subtract dividends paid. The ending balance shows common stock at $23,700 and retained earnings at $3,360.

Step-by-step explanation:

To prepare the statement of stockholders' equity for Maurice and Sons at the end of the year, we need to take into account the common stock, retained earnings, net income, dividends paid, and any new common stock issued during the year. Here is a step-by-step calculation:

Start with the beginning balance of common stock: $15,000.

Add the new common stock issued during the year: $8,700.

Calculate the ending balance of common stock: $15,000 + $8,700 = $23,700.

Start with the beginning balance of retained earnings: $2,600.

Add net income for the year to the retained earnings: $2,600 + $2,340 = $4,940.

Subtract dividends paid from the retained earnings: $4,940 - $1,580 = $3,360.

Calculate the ending balance of retained earnings: $3,360.

Thus, at the end of the year, Maurice and Sons will have a total stockholders' equity of $23,700 in common stock and $3,360 in retained earnings.

Answer 2

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Step-by-step explanation:

Beginning Stockholders equity

Common stock 15,000

additional common stock 8,700

Common stock 23,700

Retained Earning 2,600

+ net income 2,340

- dividends 1,580

ending retained earnings 3380