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.
