Question

At the beginning of 2021, Artichoke Academy 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 $52,600 Accounts payable $9,100
Supplies 13,400 Utilities payable 2,400
Prepaid rent 24,000 Salaries payable 3,500
Land 200,000 Notes payable 15,000

Required:
Prepare a statement of stockholders’ equity. Prepare a balance sheet.

Answer 1

Answer and Explanation:

The preparation of the statement of the stockholder equity and balance sheet would be shown in the attachment below:

The formulas for ending retained earning balance and stockholder equity is

Ending retained earnings = Opening retained earnings + net income - dividend paid

And, the ending equity is

= Opening equity + additional shares

The same would be shown in the attachment