The stockholders' equity accounts of Gonzalez, Inc., at January 1, 2022, are as follows.

Instructions

With the class divided into groups, complete the following.
a. Determine the retained earnings balance at December 31, 2022. There are no preferred dividends in arrears.
b. Discuss why the overstatement of 2021 depreciation expense is not treated as an adjustment of the current year's income.
c. Discuss the reasons why a company might decide to issue a stock dividend rather than a cash dividend.

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Preferred Stock, no par, 4,000 shares issued Common Stock, no par, 140,000 shares issued Retained Earnings $400,000 700,000 550,000