Question

Exercise 4-16 Sheffield Co. reports the following information for 2020: sales revenue $777,100, cost of goods sold $520,000, operating expenses $89,200, and an unrealized holding loss on available-for-sale debt securities for 2020 of $53,700. It declared and paid a cash dividend of $11,670 in 2020. Sheffield Co. has January 1, 2020, balances in common stock $360,400; accumulated other comprehensive income $86,000; and retained earnings $92,040. It issued no stock during 2020. (Ignore income taxes.) Prepare a statement of stockholders’ equity.

Answer 1

Answer:

Sheffield Co  

statement of stockholders' equity    

for the year ended 31th December 2020    

                 Common Stock RE            OCI   Total

Balance Jan 1 360,400      92,040 86,000 538,440

Net Income                                 167,900                 167,900

unrealized loss                                              -53,700     -53,700

Dividends                        -11,670             -11,670

Stock issued

Balance, Dec 31 360,400      248,270          608,670

Explanation:

We need to calcualte the net income:

sales revenue           777,  100

cost of goods sold  (520,000)

operating expenses (89,200)

Net Income                167,900

This will go into retained earnings

Dividends will also impact on retained earnings

Unrealized holding loss on available-for-sale debt securities for 2020 of $53,700.

This will modify the other comprehensive income.

The rest, will be post the beginning balance and include this variation.