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To prepare the statement of stockholders' equity for Thompson Computer Services for the year ended March 31, we need to follow these steps:
1. Determine the beginning balances of common stock and retained earnings:
- Common stock at the beginning of the year: [tex]$125,400 - Retained earnings at the beginning of the year: $[/tex]66,000
2. Identify any additional stock issued during the year:
- Additional stock issued during the year: [tex]$25,700 3. Calculate total expenses: - Miscellaneous expense: $[/tex]1,020
- Office expense: [tex]$1,200 - Supplies expense: $[/tex]1,670
- Wages expense: [tex]$23,550 - Total expenses = $[/tex]1,020 + [tex]$1,200 + $[/tex]1,670 + [tex]$23,550 = $[/tex]27,440
4. Calculate net income:
- Fees earned (revenue): [tex]$72,650 - Net income = Fees earned - Total expenses = $[/tex]72,650 - [tex]$27,440 = $[/tex]45,210
5. Calculate ending retained earnings:
- Dividends paid: [tex]$14,200 - Ending retained earnings = Beginning retained earnings + Net income - Dividends - Ending retained earnings = $[/tex]66,000 + [tex]$45,210 - $[/tex]14,200 = [tex]$97,010 6. Calculate ending common stock: - Ending common stock = Beginning common stock + Additional stock issued - Ending common stock = $[/tex]125,400 + [tex]$25,700 = $[/tex]151,100
7. Calculate total stockholders' equity at the end of the year:
- Total stockholders' equity = Ending common stock + Ending retained earnings
- Total stockholders' equity = [tex]$151,100 + $[/tex]97,010 = [tex]$248,110 Now, let's put all these values into the statement of stockholders' equity format: ### Thompson Computer Services ### Statement of Stockholders' Equity ### For the Year Ended March 31 | Description | Common Stock | Retained Earnings | Total Stockholders' Equity | |---------------------------|------------------|-----------------------|---------------------------------| | Beginning Balance | $[/tex]125,400 | [tex]$66,000 | | | Additional Stock Issued | $[/tex]25,700 | | |
| Net Income | | [tex]$45,210 | | | Dividends | | ($[/tex]14,200) | |
| Ending Balance | [tex]$151,100 | $[/tex]97,010 | [tex]$248,110 | In the statement: - We start with the balances at the beginning of the year. - We add any additional stock issued during the year to the Common Stock. - We add net income to Retained Earnings and deduct any dividends paid. - We finish with the balances at the end of the year. Therefore, the ending balances in common stock and retained earnings are $[/tex]151,100 and [tex]$97,010, respectively, making the total stockholders' equity $[/tex]248,110.
1. Determine the beginning balances of common stock and retained earnings:
- Common stock at the beginning of the year: [tex]$125,400 - Retained earnings at the beginning of the year: $[/tex]66,000
2. Identify any additional stock issued during the year:
- Additional stock issued during the year: [tex]$25,700 3. Calculate total expenses: - Miscellaneous expense: $[/tex]1,020
- Office expense: [tex]$1,200 - Supplies expense: $[/tex]1,670
- Wages expense: [tex]$23,550 - Total expenses = $[/tex]1,020 + [tex]$1,200 + $[/tex]1,670 + [tex]$23,550 = $[/tex]27,440
4. Calculate net income:
- Fees earned (revenue): [tex]$72,650 - Net income = Fees earned - Total expenses = $[/tex]72,650 - [tex]$27,440 = $[/tex]45,210
5. Calculate ending retained earnings:
- Dividends paid: [tex]$14,200 - Ending retained earnings = Beginning retained earnings + Net income - Dividends - Ending retained earnings = $[/tex]66,000 + [tex]$45,210 - $[/tex]14,200 = [tex]$97,010 6. Calculate ending common stock: - Ending common stock = Beginning common stock + Additional stock issued - Ending common stock = $[/tex]125,400 + [tex]$25,700 = $[/tex]151,100
7. Calculate total stockholders' equity at the end of the year:
- Total stockholders' equity = Ending common stock + Ending retained earnings
- Total stockholders' equity = [tex]$151,100 + $[/tex]97,010 = [tex]$248,110 Now, let's put all these values into the statement of stockholders' equity format: ### Thompson Computer Services ### Statement of Stockholders' Equity ### For the Year Ended March 31 | Description | Common Stock | Retained Earnings | Total Stockholders' Equity | |---------------------------|------------------|-----------------------|---------------------------------| | Beginning Balance | $[/tex]125,400 | [tex]$66,000 | | | Additional Stock Issued | $[/tex]25,700 | | |
| Net Income | | [tex]$45,210 | | | Dividends | | ($[/tex]14,200) | |
| Ending Balance | [tex]$151,100 | $[/tex]97,010 | [tex]$248,110 | In the statement: - We start with the balances at the beginning of the year. - We add any additional stock issued during the year to the Common Stock. - We add net income to Retained Earnings and deduct any dividends paid. - We finish with the balances at the end of the year. Therefore, the ending balances in common stock and retained earnings are $[/tex]151,100 and [tex]$97,010, respectively, making the total stockholders' equity $[/tex]248,110.
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