Question

Check my work 9 statements LO 1-2, 1-3, 1-5, 1-6, 1-7 [The following information applies to the questions displayed below.) Part 2 of 2 11.12 points Pratt Corp. started the Year 2 accounting period with total assets of $30,000 cash, $12,000 of liabilities, and $5,000 of retained earnings. During the Year 2 accounting period, the Retained Earnings account increased by $7,550. The bookkeeper reported that Pratt paid cash expenses of $26,000 and paid a $2,000 cash dividend to stockholders, but she could not find a record of the amount of cash revenue that Pratt received for performing services. Pratt also paid $3,000 cash to reduce the liability owed to a bank, and the business acquired $4,000 of additional cash from the issue of common stock. Assume all transactions are cash transactions. eBook Print Problem 1-33A Part b References b. Prepare the Year 2 statement of changes in stockholders' equity PRATT CORP. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 Beginning common stock $ 13,000 Plus: Common stock issued Ending common stock $ Beginning retained earnings $ 5,000 Plus: Net income Less: Dividend Ending retained earnings Total stockholders' equity $ 13,000 5.000 18,000 Mc Graw Hill dustart an| < Prev ga of 9 Next

Answer 1

The changes in equity is prepared as follows:

                                                  PRATT CORP.

                                      Statement of changes in stockholder's equity

                                      For the year ended december 31, Year 2

	$	$
Beginning common stock ($30,000 - $12,000 - $5,000)	13,000
Add: Issue of common stock	4,000
Ending common stock		17,000
Beginning retained earnings	5,000
Add: Net Income   ($12,550 + $2,000 - $5,000)	9,550
Less: Dividend Paid	(2,000)
Ending retained earnings ($ 5,000 + $7,550)		12,550
Total stockholders' equity		$29,550