. (The following information applies to the questions displayed below. Pratt Corp. started the...
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(The following information applies to the questions displayed below. 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. 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 4,000 Ending common stock $ Beginning retained earnings $ 5,000 Plus: Net income 9,550 Less: Dividend (2,000) Ending retained earnings Total stockholders' equity $ 17,000 12,550 29,550
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