The balance sheet for Umami Sustainable Seafood Inc. reported the following components of equity on December 31, 2014:
Common shares, unlimited shares authorized,
20,000 shares issued and outstanding ............................................................ $368,000
Retained earnings............................................................................................... 216,000
Total equity........................................................................................................ $584,000
In 2015
, Umami had the following transactions affecting shareholders and the equity accounts:
.:.
Required
1. Prepare journal entries to record the transactions and closings for 2015.
2. Prepare a statement of changes in equity for the year ended December 31, 2015.
3. Prepare the equity section of the corporation’s balance sheet as of December 31, 2015.
Analysis Component: Explain the relationship between assets and retained earnings; use your answer in Part 3 above as part of the explanation.
SOLUTION:
Part 1 Journal entries:
2015