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Analyze equity accounts(LO 1,m 2, 3, 5). The following balances were shown on the year, end balance sheet for 2009 and 2010 for Columbia Company. For each item. give the most likely reason for the change from one year to the next.
Expert Answer
| December 31, 2009 | December 31, 2010 | Explanation | |
| Common Stock | $ 45,000 | $ 50,000 | New shares of common stock were issued in 2010 whose par value is $ 5,000 |
| Paid in Capital | $ 2,00,000 | $ 2,30,000 | New shares of common stock were issued in 2010 whose paid in capital in excess of Par Value is $ 30,000 |
| Retained Earning | $ 1,82,500 | $ 2,00,000 | The company has earned Net Income of $ 20,000 and paid dividends of $2,500 in 2010 |
| Treasury Stock | $ -3,450 | $ -5,450 | The compamy has bought back its shares from open market in 2010 of $ 2,000 |
| Working: | |||
| Beginning Retained Earning | $ 1,82,500 | ||
| Add:Net Income | $ 20,000 | ||
| Less:Ending Retained Earning | $ 2,00,000 | ||
| Dividend paid during the year | $ 2,500 | ||
