Question

At the beginning of the year (January 1), Buffalo Drilling has $12,000 of common stock outstanding and retained earnings of $6,200. During the year, Buffalo reports net income of $6,500 and pays dividends of $1,200. In addition, Buffalo issues additional common stock for $6,000.
Required:
Prepare the statement of stockholders' equity at the end of the year (December 31).

Answer 1

Answer:

Explanation:

The preparation of the statement of stockholders' equity at the end of the year is presented below:

                                            Buffalo Drilling

                             Statement of stockholders' equity

                            At the end of the year (December 31)

Particulars      Common Stock           Retained earnings             Total

Beginning

Balance          $12,000                       $6,200                                $18,200

Net income                                         $6,500                                $6,500

Dividend paid                                   -$1,200                                 -$1,200

Additional

common stock  $6,000                                                                 $6,000

Total                  $18,000                  $11,500                                 $29,500