How do i create a stockholder\'s equity statement ? Below is all the information
ID: 2460436 • Letter: H
Question
How do i create a stockholder's equity statement ? Below is all the information I have gathered. The stockholders equity statement must containg the following;
General Information
a. On April 1, 2013 a 24-month insurance policy was purchased for $24,000.
b. On January 1, 2013 Hullie & Oates paid Gretsky Advertising $48,000 for three years of advertising services. Equal services are provided each year.
c. Hullie & Oates needed some additional storage space so on November 1, 2013 they rented a unit for an annual rate of $18,500. The entire amount was expensed when paid.
d. $5,800 of store supplies were purchased during the year and the asset store supplies was increased. $3,200 of these supplies were used during the year.
e. $7,775 of office supplies were purchased during the year and were immediately expensed. $1,250 of these supplies remained at the end of 2013.
f. On July 1, 2013, Hullie & Oates issued a 9-month note receivable to Shanahan Co. at an annual interest rate of 6%. Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.
g. Depreciation for the year is based on the following:
- Straight line depreciation
- Store equipment – Assets were held for the entire year; Residual Value = $10,000; Service life is estimated to be 10 years.
- Office equipment – Assets were held for the entire year; Residual Value = $7,000; Service life is estimated to be 3 years.
h. Sales salaries of $8,400 and office salaries of $6,500 remained unpaid at 12/31/13.
i. On October 1, 2013, Hullie & Oates rented a portion of one store to Twist & Chase Co. The contract was for 6 months and Hullie & Oates required the 6 months of cash upfront on October 1st. The rent is being earned equally over the next 6 months. When cash was received, unearned rent was appropriately recorded.
j. The note payable was outstanding the entire year and a 6.5% interest rate exists on the note. No interest has been recorded for the year.
k. Based on past experience, Hullie & Oates calculates bad debt expense at 1% of net sales for the year.
worksheet:
Journal Entires
Common Stock Retained Earnings Total SE Balance, January 1 Add: Net Income Less: Dividends Balance, December 31Explanation / Answer
Income statement
Sales
$783,350
Less: Sales return and allowances
-12,800
Less: Sales discounts
-8,300
Net sales
$767,250
Less: cost of goods sold
-457,200
Gross profit
$310,050
Expenses:
Sales salaries expense
103,050
Advertising expense
16,000
Depreciation – Store equipment
34,000
Store supplies expense
3,200
Miscellaneous selling expense
2,600
Office salaries expense
40,500
Rent expense
3,083
Insurance expense
9,000
Depreciation – office equipment
39,333
Office supplies expense
6,525
Misc adm expense
1,650
Bad debt expense
7,673
Tota operating expense
$-266,614
Net operating income
$43,436
Other income and expense
Interest revenue
12,000
Less: interest expense
9,490
2,510
Net income
$45,946
Common stock
Retained earnings
Total stockholder’s equity
Balance Jan 1
60,000
333,825
393,825
Add: Net income
45,946
45,946
Less: Dividends
-25,000
-25,000
Balance, Dec 31
60,000
354,771
414,771
Sales
$783,350
Less: Sales return and allowances
-12,800
Less: Sales discounts
-8,300
Net sales
$767,250
Less: cost of goods sold
-457,200
Gross profit
$310,050
Expenses:
Sales salaries expense
103,050
Advertising expense
16,000
Depreciation – Store equipment
34,000
Store supplies expense
3,200
Miscellaneous selling expense
2,600
Office salaries expense
40,500
Rent expense
3,083
Insurance expense
9,000
Depreciation – office equipment
39,333
Office supplies expense
6,525
Misc adm expense
1,650
Bad debt expense
7,673
Tota operating expense
$-266,614
Net operating income
$43,436
Other income and expense
Interest revenue
12,000
Less: interest expense
9,490
2,510
Net income
$45,946
Common stock
Retained earnings
Total stockholder’s equity
Balance Jan 1
60,000
333,825
393,825
Add: Net income
45,946
45,946
Less: Dividends
-25,000
-25,000
Balance, Dec 31
60,000
354,771
414,771
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