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Mark’s Consulting experienced the following transactions for 2018, its first year of operations, and 2019. Assume...

Mark’s Consulting experienced the following transactions for 2018, its first year of operations, and 2019. Assume that all transactions involve the receipt or payment of cash.

Transactions for 2018

  1. Acquired $75,000 by issuing common stock.

  2. Received $110,000 cash for providing services to customers.

  3. Borrowed $18,000 cash from creditors.

  4. Paid expenses amounting to $55,000.

  5. Purchased land for $35,000 cash.

Transactions for 2019

Beginning account balances for 2019 are:

Cash $ 113,000
Land 35,000
Notes payable 18,000
Common stock 75,000
Retained earnings 55,000

  1. Acquired an additional $24,000 from the issue of common stock.

  2. Received $135,000 for providing services.

  3. Paid $13,000 to creditors to reduce loan.

  4. Paid expenses amounting to $62,000.

  5. Paid a $13,500 dividend to the stockholders.

  6. Determined that the market value of the land is $45,000.

  1. b-2. Prepare a statement of changes in stockholders’ equity for each year accounting period.
MARK'S CONSULTING
Statement of Changes in Stockholders’ Equity
For the Year Ended December 31, 2018
Beginning common stock
Ending common stock $0
Beginning retained earnings
Ending retained earnings 0
Total stockholders’ equity $0

Prepare a statement of changes in stockholders’ equity for the year 2019.
MARK'S CONSULTING
Statement of Changes in Stockholders’ Equity
For the Year Ended December 31, 2019
Beginning common stock
Ending common stock $0
Beginning retained earnings
Ending retained earnings 0
Total stockholders’ equity $0

Solutions

Expert Solution

b-2)
MARK'S CONSULTING
Statement of Changes in Stockholders' Equity
For the Year Ended December 31, 2018
Beginning common stock $0
Add: Issue of Common Stock $75,000
Ending common stock $75,000
Beginning retained earnings $0
Add: Net Income (see working note) $55,000
Less: Dividends $0
Ending Retained Earnings $55,000
Total stockholders' equity $130,000
Working notes:
Service revenue $110,000
Less: Expenses ($55,000)
Net Income $55,000
MARK'S CONSULTING
Statement of Changes in Stockholders' Equity
For the Year Ended December 31, 2019
Beginning common stock $75,000
Add: Issue of Common Stock $24,000
Ending common stock $99,000
Beginning retained earnings $55,000
Add: Net Income (see working note) $73,000
Less: Dividends ($13,500)
Ending Retained Earnings $114,500
Total stockholders' equity $213,500
Working notes:
Service revenue $135,000
Less: Expenses ($62,000)
Net Income $73,000

ekkarill92 answered 2 years ago
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