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Presented below is information which relates to Pharoah Company, a Canadian public corporation traded on the...

Presented below is information which relates to Pharoah Company, a Canadian public corporation traded on the Toronto Stock Exchange, for 2020.

Net income $435,000
Retained earnings, January 1, 2020 820,000
Cash dividends declared on common shares 33,000
Correction of calculation error depreciation understatement in 2016 (pre-tax) 459,000
Gain on FV-OCI investments (net of tax) 202,000
Proceeds from issuance of Pharoah common shares 55,000
Accumulated other comprehensive income, January 1, 2020 15,500


On January 1, 2020, Pharoah had 18,000 common shares outstanding with a capital balance of $450,000. During the year, Pharoah Company issued an additional 2,000 common shares.

Prepare in good form a statement of shareholders equity for the year ended December 31, 2020. Pharoah’s income tax rate is 20%.

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Answer #1

Statement of stockholders equity

Common shares Common shares capital Retained earnings Accumulated other comprehensive income Total
Balance, Jan 1,2020 18,000 $450,000 $820,000 $15,500 $1,285,500
Net income $435,000 $435,000
Correction of calculation error depreciation understatement ($367,000) ($367,000)
Adjusted balance 18,000 $450,000 $887,800 $15,500 $1,353,300
Cash dividends ($33,000) ($33,000)
Gain on FV-OCI investment $202,000 $202,000
Issuance of common stock 2,000 $55,000 $55,000
Balance, Dec 31,2020 20,000 $505,000 $854,800 $217,500 $1,575,300
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