Statement of Stockholders’ Equity The Statement of Stockholders’ Equity is also referred to as investment or...

Statement of Stockholders’ Equity

The Statement of Stockholders’ Equity is also referred to as investment or net worth. It is a financial statement in annual reports to stockholders which shows the amount of paid-in capital and retained earnings and the changes therein since the preceding report.

Solve the following three exercises and please show all of your calculations.

Exercise 1

Retained earnings 1/1/2017 $200,000

Net income for 2017 $540,000

Dividends declared 2017 $120,000

What is the amount of retained earnings at 12/31/2017

Answer:

Exercise 2

Retained earnings 12/31/2017 $960,000

Dividends declared 2017 $140,000

Net income for 2017 $650,000

What is the amount of retained earnings at January 1, 20×1?

Answer:

Exercise 3

JAN Corporation had a net income of $166,600; beginning equity was $1.2m. Additional shares of common stock were issued for $15,000. A $33,000 cash dividend was declared and paid. What is the balance of the stockholder’s equity at year end. Present your answer in statement format.

Answer:

Solutions

Expert Solution

EXERCISE 1 AMOUNT OF RETAINED EARNINGS FOR 31.12.2017

RETAINED EARNINGS 01.01.2017		2,00,000.00
ADD: NET INCOME FOR THE YEAR		5,40,000.00
LESS:DIVIDEND PAID		-1,20,000.00
		6,20,000.00

EXERCISE 2
AMOUNT OF REATINED EARNINGS FOR 01.01.2017

RETAINED EARNINGS 31.12.2017		9,60,000.00
ADD:DIVIDEND PAID		1,40,000.00
LESS: NET INCOME FOR THE YEAR		-6,50,000.00

		4,50,000.00
EXERCISE 3
	COMMON STOCK		RETAINED EARNINGS
BALANCE ON JANUARY 1	12,00,000.00		-
ISSUED SHARES FOR CASH	15,000.00		-
NET INCOME	-		1,66,600.00
CASH DIVIDENDS	-		-33,000.00
BALANCE ON DECEMBER 31	12,15,000.00		1,33,600.00

STAKEHOLDER'S EQUITY AT YEAR END = COMMON STOCK+ RETAINED EARNINGS
	13,48,600.00

ekkarill92 answered 1 year ago

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