Question

At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,500. During the year, Buffalo reports net income of $7,800 and pays dividends of $2,500. In addition, Buffalo issues additional common stock for $7,300. Required: Prepare the statement of stockholders' equity at the end of the year (December 31).

Answer 1

Answer:

Explanation:

For preparing the statement, first we have to compute the ending balance of the common stock and the retained earning

Ending balance of the common stock = Beginning balance + Additional common stock issued

= $10,000 + $7,300

= $17,300

Ending balance of the retained earnings = Beginning balance + Net income - dividend paid

= $7,500 + $7,800 - $2,500

= $12,800

So, the total stockholder equity = Ending balance of the common stock + Ending balance of the retained earnings

= $17,300 + $12,800

= $30,100

The statement of stockholder equity is shown in the spreadsheet. Kindly find the attachment below.