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16 January, 06:36

Ollie Company experienced the following events during its first-year operations: 1. Acquired $72,000 cash from the issue of common stock. 2. Borrowed $26,000 from the First City Bank. 3. Earned $59,000 of cash revenue. 4. Incurred $43,000 of cash expenses. 5. Paid a $7,000 cash dividend. 6. Paid $43,000 to purchase land. Required: Prepare a statement of changes in stockholders' equity.

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  1. 16 January, 09:36
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    Answer and Explanation:

    The preparation of the statement of changes in stockholders' equity is presented below:

    Ollie Company

    Statement of changes in stockholders' equity

    Beginning common stock $0

    Add: Common stock issuance $72,000

    Ending common stock $72,000

    Beginning retained earning $0

    Add: Net income $16,000 ($59,000 - $43,000)

    Less: cash Dividend paid - $7,000

    Ending retained earning $9,000

    Total stockholder equity $81,000 ($72,000 + $9,000)
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