Question

Financial information related to Organic Products Company for the month ended June 30, 

20Y9, is as follows:

Net income for June                                     $ 115,000

Dividends paid in June                                       25,000

Common stock, June 1, 20Y9                           180,000

Common stock issued in June                           50,000

Retained earnings, June 1, 20Y9                    1,630,000

a. Prepare a statement of stockholders’ equity for the month ended June 30, 20Y9.

b. Why is the statement of stockholders’ equity prepared before the June 30, 20Y9, balance sheet?

Answer 1

 

a.	Organic Products Company Statement of Stockholders’ Equity For the Month Ended June 30, 20Y9
		Common Stock	Retained Earnings	Total
	Balances, June 1, 20Y9	$180,000	$1,630,000	$1,810,000
	Issued common stock	50,000		50,000
	Net income		115,000	115,000
	Dividends		(25,000)	(25,000)
	Balances, June 30, 20Y9	$230,000	$1,720,000	$1,950,000

 

a.    The statement of stockholders’ equity is prepared before the June 30, 20Y9, balance sheet because common stock and retained earnings as of June 30, 20Y9, are needed for the June 30, 20Y9, balance sheet.