Question

Sheridan Company began the year with $105800 in its Common Stock account and a debit balance in Retained Earnings of $45400. During the year, the company earned net income of $22700 and declared and paid $7600 of dividends. In addition, the company sold additional common stock amounting to $27700. Based on this information, what should the transaction analysis show for the ending total of all stockholders' equity accounts?

Answer 1

Answer:

total common Stock                  128.500

Total retained earnings           $-25.300

Explanation:

began of the year

Common Stock Account  $105.800

Retained Earning              -$45.400

Movement in the accounts

Common Stock Accounting  

Initial common Stock               $105.800

Additional common stock          $27.700

total common Stock                  128.500

Retaining Earnings                  -45.400

Net income yerar 1                   +$27.700

paid dividends                          - $7.600

Total retained earnings           $-25.300

Total stockholders account   $103.200

As you can see you add the new common stock amounting to the past common stock , the retaining earning starts as a debit balance account it's the reason why I put negative a the starts, after you sum the net income of the year and subtract the paid dividends, as the result you have a debt balance in retained earning of  $-25.300