5 Reporting Changes in Shareholders' Equity The shareholders' equity accounts for Erle Enterprises Inc. at the beginning of the year were as follows: Preferred shares (10,000 issued) $300,000 Common shares (900,000 issued) 900,000 Contributed surplus 10,000 Retained earnings 400,000 Accumulated other comprehensive income 25,000 During the year the following transactions/events took place: 1. A 2-for-1 preferred stock split; market price was $30 2. Declared a 10% stock dividend to common shareholders; fair value was $1.20 3. Profit before tax was $200,000 4. Other comprehensive income net of tax was $20,000 5. Inventory was debited $20,000 to correct a previous period error The tax rate for Erle Enterprises is 30%. What would be the shareholders' equity balance at the end of the year? O $1,875,000 O $1,815,000 O $1,917,000 O $1,809,000
5 Reporting Changes in Shareholders' Equity The shareholders' equity accounts for Erle Enterprises Inc. at the beginning of the year were as follows: Preferred shares (10,000 issued) $300,000 Common shares (900,000 issued) 900,000 Contributed surplus 10,000 Retained earnings 400,000 Accumulated other comprehensive income 25,000 During the year the following transactions/events took place: 1. A 2-for-1 preferred stock split; market price was $30 2. Declared a 10% stock dividend to common shareholders; fair value was $1.20 3. Profit before tax was $200,000 4. Other comprehensive income net of tax was $20,000 5. Inventory was debited $20,000 to correct a previous period error The tax rate for Erle Enterprises is 30%. What would be the shareholders' equity balance at the end of the year? O $1,875,000 O $1,815,000 O $1,917,000 O $1,809,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:5 Reporting Changes in Shareholders' Equity
The shareholders' equity accounts for Erle Enterprises Inc. at the beginning of the year were as follows:
Preferred shares (10,000 issued)
$300,000
900,000
Common shares (900,000 issued)
Contributed surplus
10,000
Retained earnings
400,000
Accumulated other comprehensive income
25,000
During the year the following transactions/events took place:
1. A 2-for-1 preferred stock split; market price was $30
2. Declared a 10% stock dividend to common shareholders; fair value was $1.20
3. Profit before tax was $200,000
4. Other comprehensive income net of tax was $20,000
5. Inventory was debited $20,000 to correct a previous period error
The tax rate for Erle Enterprises is 30%. What would be the shareholders' equity balance at the end of the year?
O $1,875,000
O $1,815,000
O $1,917,000
O $1,809,000
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