A finished ACC-371 Topic 6 stockholders equity rollforward example, carrying six equity events into the specific capital accounts they change and reconciling the share count behind both dividends. Searches like "acc 371 topic 6 assignment example", "acc371 topic 6 sample" and "acc-371 topic 6 example" land here.
What a finished ACC-371 Topic 6 stockholders equity rollforward looks like
The rollforward is a columnar statement with one column per equity account, from common stock at par to treasury stock, and a row per transaction, all figures illustrative. Opening retained earnings of $2,000,000 is first restated downward by $37,500, the after-tax effect of expenses omitted from last year's accruals. Twenty thousand shares issued at $15 split into $20,000 of par and $280,000 above it. Five thousand shares bought back at $18 enter treasury stock at cost, and 2,000 of them reissued at $22 produce $8,000 of treasury paid-in capital, never a gain. A $0.50 cash dividend on 117,000 outstanding shares removes $58,500 and creates a payable. A 10 percent stock dividend moves $234,000 out of retained earnings at market value. Net income of $400,000 brings total equity to $4,058,000, and the columns foot to that figure.
How an ACC-371 Topic 6 example is structured
Every row of the rollforward names the transaction, its date and the accounts it touches, so each column can be totaled and checked on its own. It opens with the balances carried from last year's statement, then restates opening retained earnings for the error before any current-year activity appears, since the correction belongs to a prior period. The issuance row follows, separating par from the excess. Treasury activity comes next in two rows, the purchase at cost and the partial reissue, with the difference routed to paid-in capital. The dividend rows sit together: the cash dividend with its payable, then the stock dividend measured at fair value because it is small. Net income enters last. Beneath the statement, a reconciliation of shares issued, held in treasury and outstanding confirms the 117,000 used for both dividends. A closing exhibit lists the journal entry behind each row.
The error corrected in opening balances
The omitted accrual is charged to opening retained earnings net of tax, which keeps a prior-period mistake out of this year's income statement entirely.
Par separated from the excess
Each share issued at $15 credits $1 to common stock and $14 to paid-in capital, so the legal capital figure stays visible in its own column.
Treasury reissue routed around income
Selling treasury shares above cost increases paid-in capital, because under US GAAP a company cannot report a gain from trading in its own shares.
Shares outstanding reconciled before dividends
Issued shares less the 3,000 still held in treasury gives the 117,000 outstanding, and both dividends are computed on that count rather than on shares issued.
A small stock dividend at market value
Distributing 11,700 new shares at $20 transfers $234,000 from retained earnings, while total equity stays exactly where it stood before the declaration.
Where marks go in ACC-371 Topic 6
Equity work is checked account by account, so a single row posted to the wrong column shows up in two totals. Recording the $8,000 from the treasury reissue as a gain on the income statement is marked wrong outright, since transactions in a company's own shares never produce income. Correcting last year's omitted accrual through this year's expenses buries a prior-period error in current results, when it belongs in opening retained earnings. Dividends computed on shares issued, with treasury shares included, overstate both the cash dividend and the stock dividend. A small stock dividend recorded at par, rather than at fair value, moves too little out of retained earnings and loses credit in most sections. The subtler loss is a rollforward that totals correctly with no share reconciliation, leaving the reader to trust the counts behind every dividend.
Get an ACC-371 Topic 6 example written to your instructions
Send the ACC-371 Topic 6 instructions, the rubric and the equity transactions or opening balances your section supplied. We write a custom example to them, with every transaction routed to its specific capital account, treasury activity kept out of income, dividends computed on outstanding shares and the share count reconciled, in 24 to 48 hours. The first one is free.
ACC-371 Topic 6 questions, answered
Why is a gain on reissued treasury stock not income?
Because the company is dealing with its own owners, not earning anything from operations or from outsiders. Buying shares back returns capital; selling them again raises capital. Any excess over cost goes to paid-in capital, and a shortfall reduces treasury paid-in capital first and retained earnings after that. The rule keeps a company from manufacturing earnings by trading in its own stock.
When is a stock dividend recorded at market value rather than par?
When it is small, generally below 20 to 25 percent of the shares outstanding, because a distribution that size is unlikely to move the share price much and shareholders may see it as a real distribution. A large stock dividend is usually recorded at par, since it behaves more like a split. A split itself changes the share count and the par value per share without any entry to the capital accounts.
How is an error found in last year's statements corrected?
By restatement. The prior period is corrected as though the error had never happened, and the cumulative effect on periods before those presented is carried to the opening balance of retained earnings, net of tax. The current income statement is left alone, and the notes describe the error and its effect. A change in estimate, by contrast, is applied going forward, and papers sometimes confuse the two treatments.