Question

The following is selected financial information for Osmond Dental Laboratories for 2021 and 2022: 2021 2022 Retained earnings, January 1 $ 53,000 ? Net income 40,000 45,000 Dividends 12,000 25,000 Common stock 78,000 ? Osmond issued 3,000 shares of additional common stock in 2022 for $22,000. There were no other stock transactions. Prepare a statement of stockholders' equity for the year ended December 31, 2022. (Amounts to be deducted should be indicated with minus sign.)

Answer 1

Osmond Dental Laboratories

Statement of Stockholders' Equity:

2022

Common stock $90,000

Retained earnings, December 31 101,000

Stockholders' equity $191,000

Step-by-step explanation:

a) Data and Calculations:

Osmond Dental Laboratories for 2021 and 2022:

2021 2022

Retained earnings, January 1 $ 53,000 ?

Net income 40,000 45,000

Dividends 12,000 25,000

Common stock 78,000 ?

Analysis:

Cash $22,000 Common stock $22,000

Retained earnings, January 1 $ 53,000 81,000

Net income 40,000 45,000

Dividends -12,000 -25,000

Retained earnings, December 31 $ 81,000 $101,000

Common stock on December 31 = $90,000 ($78,000 + $22,000)

Statement of Stockholders' Equity:

Osmond Dental Laboratories for 2021 and 2022:

2021 2022

Common stock $78,000 $90,000

Retained earnings, December 31 81,000 101,000

Stockholders' equity $159,000 $191,000