Question

At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $6,400. During the year, Buffalo reports net income of $6,700 and pays dividends of $1,400. In addition, Buffalo issues additional common stock for $6,200. Required: Prepare the statement of stockholders' equity at the end of the year (December 31)

Answer 1

Total Stock Holder equity=$27900

Step-by-step explanation:

Amount in the beginning:

Common Stock=$10000 Retained earnings=$6400

Stock Holder equity=Common Stock+ Retained earnings

Stock Holder equity=10000+6400

Stock Holder equity=$16400

During the year:

Net Income=$6700, Dividends=-$1400 (-ve shows less from total)

Additional Common Stock=$6200

Total Common Stock=$10000+$6200

Total Common Stock=$16200

Total Retained Earning=$6400+$6700-$1400

Total Retained Earnings=$11700

Total Stock Holder equity=Total Common Stock+Total Retained Earnings

Total Stock Holder equity=$16200+$11700

Total Stock Holder equity=$27900