Statement of stockholders’ equity

Question

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!