Question

At the beginning of Year 1, a company reported a balance in common stock of $154,000 and a balance in retained earnings of $54,000. During the year, the company issued additional shares of stock for $44,000, earned net income of $34,000, and paid dividends of $10,400. In addition, the company reported balances for the following assets and liabilities on December 31. Assets Liabilities Cash $ 53,000 Accounts payable $ 8,600 Supplies 11,300 Utilities payable 3,200 Prepaid rent 26,000 Salaries payable 3,900 Land 220,000 Notes payable 19,000 Required: Prepare a statement of stockholders’ equity. Prepare a balance sheet.

Answer 1

statement of stockholders' equity

for the year 1

Common Stock Retained Earings Total

Balance Jan 1 154,000 54,000 208,000

Net Earnings 34,000 34,000

Dividends -10,400 -10,400

Stock issued 44,000 44,000

Balance, Dec 31 198,000 77,600 275,600

Assets Liability

Cash 53,000 Account Payable 8,600

Supplies 11,300 Utilities Payable 3,200

Prepaid Rent 26,000 Salaries Payable 3,900

Land 220,000 Note payable 19,000

Common Stock 198,000

Retained Earnings 77,600

Total Assets 310,300 Total Liab + SE 310,300

Step-by-step explanation:

For the stockholder statment, we simply post the values of the first part.

Then for the balance sheet: We will work with the numbers given in the the second part.

The payable are the liabilities, the rest are assets.

Finally, we transfer the stock value from the Stockholders statemnet

and check the total for each column