Question

Scott Lockhart owns and operates AAA Delivery Services. On January 1, 20Y7, Common Stock had a balance of $40,000 and Retained Earnings of $815,500. During the year, no additional common stock was issued, and $10,000 of dividends were paid. For the year ended December 31, 20Y7, AAA Delivery reported a net income of $67,250. Prepare a statement of stockholders' equity for the year ended December 31, 20Y7.

Answer 1

Answer and Explanation:

The preparation of the statement of stockholder equity should be presented below:

Statement of stockholders' equity

For the year ended December 31, 20Y7

Particulars                   Common Stock          Retained Earnings          Total

Beginning balance,

January 1                       40000                           815500                        855500

Add: Net income            0                                    67250                           67250

Less: Dividends paid     0                                    -10000                        -10000

Ending balance,

December 31                  40000                              872750                   912750