Question

At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,800. During the year, Buffalo reports net income of $8,100 and pays dividends of $2,800. In addition, Buffalo issues additional common stock for $7,600 Required: Prepare the statement of stockholders' equity at the end of the year (December 31). BUFFALO DRILLING Statement of Stockholders' Equity Total Common Stock Earnings Retained Stockholders Equity Beginning balance Ending balance

Answer 1

Answer:

Closing balance of equity = $30,700

Please refer answer for statement.

Explanation:

Provided information we have,

Opening balances as follows:

Common Stock Outstanding = $10,000

Retained Earnings = $7,800

Net income for the year = $8,100,

Dividends for the year = $2,800

Thus, net income added to retained earnings = $8,100 - $2,800 = $5,300

Additional common stock issued = $7,600

Statement of Stockholder's equity

Total Common Stock issued = $7,600

Earnings Retained = $5,300 = $5,300

Stockholder's Equity beginning balance = Equity + retained earnings = $10,000 + $7,800 = $17,800

Closing balance of equity = $30,700