Question

At the beginning of the year (January 1), Buffalo Drilling has $12,000 of common stock outstanding and retained earnings of $6,200. During the year, Buffalo reports net income of $6,500 and pays dividends of $1,200. In addition, Buffalo issues additional common stock for $6,000.

Required:
Prepare the statement of stockholders' equity at the end of the year (December 31).

Answer 1

Step-by-step explanation:

The preparation of the statement of stockholders' equity at the end of the year is presented below:

Buffalo Drilling

Statement of stockholders' equity

At the end of the year (December 31)

Particulars Common Stock Retained earnings Total

Beginning

Balance $12,000 $6,200 $18,200

Net income $6,500 $6,500

Dividend paid -$1,200 -$1,200

Additional

common stock $6,000 $6,000

Total $18,000 $11,500 $29,500