Question

The following is selected financial information for Osmond Dental Laboratories for 2021 and 2022: 2021 2022 Retained earnings, January 1 $ 53,000 ? Net income 40,000 45,000 Dividends 12,000 25,000 Common stock 78,000 ? Osmond issued 3,000 shares of additional common stock in 2022 for $22,000. There were no other stock transactions. Prepare a statement of stockholders' equity for the year ended December 31, 2022. (Amounts to be deducted should be indicated with minus sign.)

Answer 1

Answer:

Osmond Dental Laboratories

Statement of Stockholders' Equity:

                                                           2022

Common stock                              $90,000

Retained earnings, December 31   101,000

Stockholders' equity                    $191,000

Explanation:

a) Data and Calculations:

Osmond Dental Laboratories for 2021 and 2022:

                                                       2021        2022

Retained earnings, January 1 $ 53,000              ?

Net income                                 40,000    45,000

Dividends                                    12,000    25,000

Common stock                          78,000              ?

Analysis:

Cash $22,000 Common stock $22,000

Retained earnings, January 1         $ 53,000     81,000

Net income                                         40,000    45,000

Dividends                                           -12,000   -25,000

Retained earnings, December 31   $ 81,000 $101,000

Common stock on December 31 = $90,000 ($78,000 + $22,000)

Statement of Stockholders' Equity:

Osmond Dental Laboratories for 2021 and 2022:

                                                           2021        2022

Common stock                             $78,000  $90,000

Retained earnings, December 31  81,000     101,000

Stockholders' equity                  $159,000  $191,000