[Anonymous]

So I’m looking at an example of a statement of changes in stockholders’ equity from the Ninja book. Preferred stock and Common stock are shown as subtractions in the retained earnings column. Why?? I know the dividends for each would decrease retained earnings, but does the issuance of them reduce it too? I am confused.

I remember having a simulation on preparing the statement of changes in stockholders’ equity section, which I did not study before I took my last FAR exam!! I didn’t know what the heck it was and wasn’t sure of the format. This time around, I am taking the blueprint seriously…

[Anonymous]

Retained earnings, common stock, and preferred stock are all separate balance sheet equity accounts (credit balances). Sounds like a refresher on stock transactions might help.

[Anonymous]

I know SHE accounts all have a normal credit balance. My question is pertaining to the Statement format itself.

The statement shows the beginning balances in each SHE account (these are the columns). It then has specific transactions listed in each row. I see how it was broken down now. The two rows were preferred stock and common stock which showed negative changes. I got confused because I did not realize right above those two was a row with “Cash Dividends:”. Didn't pay attention to the semi-colon.

[Author]

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