Answer:
Honor Inc.
The accurate way of reporting the common stock and retained earnings on the statement of stockholders' equity at the end of the year is:
d. $10,000 is shown as common stock, and $1,400 is shown as retained earnings.
Explanation:
a) Data and Calculations:
Common stock at the beginning of the year $8,000
Common stock issued during the year $2,000
Common stock at the ending of the year $10,000 (8,000 + $2,000)
Net income for the year $5,200
Dividends paid during the year$3,800
Retained Earnings $1,400 ($5,200 - $3,800)
b) Honor's common stock increased from $8,000 to $10,000. The dividends paid during the year reduced the amount of the Retained Earnings.
