Question

Service revenue $ 78,500 Rent expense 21,000 Postage expense 1,500 Salaries expense 22,000 Legal fees expense 2,600 Supplies expense 20,000 In addition, the balance of common stock at the beginning of the year was $175,000, and the balance of retained earnings was $36,000. During the year, the company issued additional shares of common stock for $30,000 and paid dividends of $20,000. Required: Prepare an income statement. Prepare a statement of stockholders’ equity.

Answer 1

Answer:

statement of stockholders' equity    

for the year ended 31th December 20XX    

            Common Stock Retained Earings Total

Balance Jan 1         175,000         36,000          211, 000

Net Earnings                           30,900           30,900

Dividends                          -20,000          -20,000

Stock issued           30,000                           30,000  

Balance, Dec 31 205,000           46,900           251,900

Explanation:

The first step, will be to calculate the net incoem:

Revenue                            78,000

Rent expense        21,000

postage expense    1 ,500

salaries expenses 22,000

legal fees expense 2,600

Total expense                   (47,100)

Net earnings                     30,900

And now we can build the statement of Stockholders equity