C. Reither Co. reports the following information for 2014: sales revenue $700,000; cost of goods sold $500,000; operating expenses $80,000; and an unrealized holding loss on available-for-sale securities for 2014 of $60,000. It declared and paid a cash dividend of $10,000 in 2014. C. Reither Co. has January 1, 2014, balances in common stock $350,000; accumulated other comprehensive income $80,000; and retained earnings $90,000. It issued no stock during 2014. Prepare a statement of stockholders' equity.
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To prepare the statement of stockholders' equity for C. Reither Co. for the year 2014, we need to consider several elements: beginning balances, any changes during the year (such as net income, other comprehensive income (OCI), and dividends), and ending balances. The statement of stockholders' equity typically includes common stock, accumulated other comprehensive income (AOCI), and retained earnings.
Let's break down each element and then assemble the statement:
1. Common Stock: - Beginning balance: $350,000 - Issued during 2014: $0 (no stock was issued) - Ending balance: $350,000
2. Accumulated Other Comprehensive Income (AOCI): - Beginning balance: $80,000 - Changes during 2014: Unrealized holding loss on available-for-sale securities: -$60,000 - Ending balance: $80,000 - $60,000 = $20,000
3. Retained Earnings: - Beginning balance: $90,000 - Add: Net income for 2014 * Sales Revenue: $700,000 * Less: Cost of Goods Sold: -$500,000 * Less: Operating Expenses: -$80,000 - Net Income: $700,000 - $500,000 - $80,000 = $120,000 - Less: Cash Dividends Declared and Paid: -$10,000 - Ending balance: $90,000 + $120,000 - $10,000 = $200,000
Now we can assemble the statement of stockholders' equity:
Statement of Stockholders' Equity for the Year Ended December 31, 2014
Common Stock: - Beginning Balance, January 1, 2014: $350,000 - Add: Issued during 2014: $0 - Ending Balance, December 31, 2014: $350,000
Accumulated Other Comprehensive Income (AOCI): - Beginning Balance, January 1, 2014: $80,000 - Less: Unrealized holding loss on available-for-sale securities: -$60,000 - Ending Balance, December 31, 2014: $20,000
Retained Earnings: - Beginning Balance, January 1, 2014: $90,000 - Add: Net Income for 2014: +$120,000 - Less: Dividends Declared and Paid: -$10,000 - Ending Balance, December 31, 2014: $200,000
Total Stockholders' Equity, December 31, 2014: $570,000