Question

Exercise 1-7A Prepare a statement of stockholders' equity (LO1-3) At the beginning of the year (January 1), Buffalo Drilling has $12,000 of common stock outstanding and retained earnings of $7,400. During the year, Buffalo reports net income of $7,700 and pays dividends of $2,400. In addition, Buffalo issues additional common stock for $7,200. Required: Prepare the statement of stockholders' equity at the end of the year (December 31).

Answer 1

See below

Step-by-step explanation:

Statement of stockholder's equity at the end of the year 31, December.

•Retained earning

Opening balance

$7,400

Income for the year

$7,700

Dividend paid

($2,400)

Common stock issuance

------------

End of year balance

$12,700

•Common stock

Opening balance

[$12,000 + $7,400]

$19,400

Income for the year

$7,700

Dividend paid

($2,400)

Common stock issuance

$7,200

End of year balance

$31,900

= $31,900 - $12,700

= $19,200