Question

Statement of stockholders’ equity

The revenues and expenses of A-One Travel Service for the year ended August 31, 20Y6, follow:

Account Amount
Fees earned $1,150,000
Office expense 150,000
Miscellaneous expense 45,000
Wages expense 640,000
Kate Duffner invested an additional $15,000 in the business in exchange for common stock, and $50,000 of dividends were paid during the year. Common stock had a balance of $60,000 and retained earnings had a balance of $775,000 as of September 1, 20Y5.

Prepare a statement of stockholders’ equity for the year ended August 31, 20Y6. If an amount box does not require an entry, leave it blank.

Answer 1

Here is the statement of stockholders’ equity for A-One Travel Service for the year ended August 31, 20Y6:

**A-One Travel Service**
**Statement of Stockholders’ Equity**
**For the Year Ended August 31, 20Y6**

| **Common Stock** | **Retained Earnings** | **Total Stockholders' Equity** |
|---------------------|---------------------|-------------------------------|
| Beginning Balance (Sept 1, 20Y5) | $60,000 | $775,000 | $835,000 |
| Issuance of Common Stock | +$15,000 | | +$15,000 |
| Net Income | | | |
|   (Fees Earned - Expenses) | | | |
|   (1,150,000 - 150,000 - 45,000 - 640,000) | | +$315,000 | |
| Dividends Paid | | -$50,000 | |
| **Ending Balance (Aug 31, 20Y6)** | **$75,000** | **$1,040,000** | **$1,115,000** |

### Calculation of Net Income:
- Fees Earned: $1,150,000
- Total Expenses:
- Office Expense: $150,000
- Miscellaneous Expense: $45,000
- Wages Expense: $640,000
- Total Expenses = $150,000 + $45,000 + $640,000 = $835,000

**Net Income = Fees Earned - Total Expenses**
Net Income = $1,150,000 - $835,000 = **$315,000**

So, the final balances in the statement of stockholders' equity are:
- Common Stock: $75,000
- Retained Earnings: $1,040,000
- Total Stockholders' Equity: $1,115,000

Feel free to ask if you have any further questions!