Question

The equity section of XYZ Corporation’s balance sheet at January 1, 2020, showed the following information....

The equity section of XYZ Corporation’s balance sheet at January 1, 2020, showed the following information.

Share capital – ordinary        $500,000
Share capital – preference   250,000
Retained earnings       150,000
Total equity   900,000
              
XYZ Corporation’s comprehensive income for the year ended 31 December 2020 was $150,000. During the year, XYZ Corporation completed the following transactions.
(a) Issued 20,000 ordinary shares at $5 per share.
(b) Repurchased all the preference shares.
(c) Paid a $20,000 dividend on ordinary shares.

Required
Prepare a statement of changes in equity for XYZ Corporation for the year ended 31 December 2020.

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Answer #1

Answer:

XYZ Corporation
Statement of changes in equity
For the year ending December 31,2020
Share capital-ordinary Share capital-preference Retained earnings Treasury stock Total stockholders' equity
Balance of January 01,2020 $500,000 $250,000 $150,000 $900,000
Issued ordinary shares for cash [20000*$5] $100,000 $100,000
Repurchase of preference shares ($250,000) ($250,000)
Cash dividends ($20,000) ($20,000)
Balance on December 31,2020 $600,000 $250,000 $130,000 ($250,000) $730,000
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