Chapter 14, Problem 14.5BYP

(a)

To determine

Stockholder’s Equity: Shareholder’s equity is also known as owner’s equity. It is a part of balance sheet other than assets and liabilities. It indicates the capital contributed by the owner of his business.

Retained Earnings Statement: The statement which provides retained earning’s information over a period of time to the balance sheet is called as retained earnings statement. It shows changes in owner’s equity over a period of time.

To prepare: The retained earnings statement for the year.

(b)

To determine

The reason for non treatment of depreciation expense as an adjustment of current years’ income.

(c).

To determine

The reasons to choose stock dividend rather than cash dividend.