Question

At the beginning of Year 1, a company reported a balance in common stock of $164,000 and a balance in retained earnings of $64,000. During the year, the company issued additional shares of stock for $54,000, earned net income of $44,000, and paid dividends of $11,400. In addition, the company reported balances for the following assets and liabilities on December 31.

Assets Liabilities
Cash $53,600 Account payable $9,100
Supplies 13,400 Un-earned revenue 2,400
Prepaid rent 24,000 Salaries payable 3,500
Land 200,000 Notes payable 15,000

Required:
a. Prepare a statement of stockholders' equity.
b. Prepare a balance sheet.

Answer 1

Step-by-step explanation:

The preparation of the statement of stockholder equity and balance sheet is presented below:

a. Statement of stockholder equity

Particulars Common stock Retained earnings Total stock equity

Beg balance $150000 $50,000 $200,000

Add: Addi shares $40,000 $40,000

Add: Net income $30,000 $30,000

Less: dividend -$10000 -$10000

Total $190,000 $70,000 $260,000

b. Balance sheet

Assets Amount

Cash $52,600

Supplies $13,400

Prepaid rent $24,000

Land $200,000

Total assets $290,000

Liabilities Amount

Account payable $9,100

Un-earned revenue $2,400

Salaries payable $3,500

Notes payable $15,000

Stockholder equity $260,000

Total liabilities & stockholder equity $290,000