Answered

Welcome to Westonci.ca, the place where your questions find answers from a community of knowledgeable experts. Explore a wealth of knowledge from professionals across different disciplines on our comprehensive platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Exercise 1-7 (Algo)

Prepare a Statement of Stockholders' Equity (LO1-3)

At the beginning of the year (January 1), Cowpoke Drilling has \[tex]$10,000 of common stock outstanding and retained earnings of \$[/tex]7,500. During the year, Cowpoke reports net income of \[tex]$7,800 and pays dividends of \$[/tex]2,500. In addition, Cowpoke issues additional common stock for \[tex]$7,300.

\ \textless \ strong\ \textgreater \ Required:\ \textless \ /strong\ \textgreater \
Prepare the statement of stockholders' equity at the end of the year (December 31).

\[
\begin{array}{|l|l|l|l|}
\hline \multicolumn{4}{|c|}{\text{COWPOKE DRILLING}} \\
\hline \multicolumn{4}{|c|}{\text{Statement of Stockholders' Equity}} \\
\hline \multicolumn{4}{|c|}{\text{For the Year Ended December 31}} \\
\hline & \text{Common Stock} & \text{Retained Earnings} & \text{Total Stockholders' Equity} \\
\hline \text{Beginning balance} & \$[/tex]10,000 & \[tex]$7,500 & \$[/tex]17,500 \\
\hline \text{Issuance of common stock} & \[tex]$7,300 & & \$[/tex]7,300 \\
\hline \text{Net income} & & \[tex]$7,800 & \$[/tex]7,800 \\
\hline \text{Dividends} & & (\[tex]$2,500) & (\$[/tex]2,500) \\
\hline \text{Ending balance} & \[tex]$17,300 & \$[/tex]12,800 & \$30,100 \\
\hline
\end{array}
\]

Sagot :

GinnyAnswer
Sure, let's go through the preparation of the statement of stockholders' equity for Cowpoke Drilling for the year ended December 31 following the provided structure:

### COWPOKE DRILLING
### Statement of Stockholders' Equity
### For the Year Ended December 31
[tex]\[ \begin{array}{|l|r|r|r|} \hline & \text{Common Stock} & \text{Retained Earnings} & \text{Total Stockholders' Equity} \\ \hline \text{Beginning balance} & \$10,000 & \$7,500 & \$17,500 \\ \hline \text{Additions:} & & & \\ \hspace{0.5cm}\text{Net Income} & & \$7,800 & \$7,800 \\ \hline \text{Subtractions:} & & & \\ \hspace{0.5cm}\text{Dividends Paid} & & (\$2,500) & (\$2,500) \\ \hline \text{Common Stock Issued} & \$7,300 & & \$7,300 \\ \hline \text{Ending balance} & \$17,300 & \$12,800 & \$30,100 \\ \hline \end{array} \][/tex]

Explanation:

1. Beginning Balance (common stock and retained earnings):
- Common stock: \[tex]$10,000 - Retained earnings: \$[/tex]7,500
- Total stockholders' equity: \[tex]$10,000 + \$[/tex]7,500 = \[tex]$17,500 2. Additions: - Net income added to retained earnings: \$[/tex]7,800

3. Subtractions:
- Dividends paid subtracted from retained earnings: \[tex]$2,500 4. Changes in Common Stock: - Additional common stock issued: \$[/tex]7,300
- Ending common stock: \[tex]$10,000 (beginning) + \$[/tex]7,300 (additional) = \[tex]$17,300 5. Ending Balance: - Ending retained earnings: \$[/tex]7,500 (beginning) + \[tex]$7,800 (net income) - \$[/tex]2,500 (dividends) = \[tex]$12,800 - Ending common stock: \$[/tex]17,300
- Total stockholders' equity: \[tex]$17,300 (common stock) + \$[/tex]12,800 (retained earnings) = \[tex]$30,100 Thus, the statement of stockholders' equity at the end of the year will have ending balances of \$[/tex]17,300 in common stock, \[tex]$12,800 in retained earnings, and a total stockholders' equity of \$[/tex]30,100.
We appreciate your time on our site. Don't hesitate to return whenever you have more questions or need further clarification. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Thank you for choosing Westonci.ca as your information source. We look forward to your next visit.