Case 15-2 Financial Statements under Various Theories of Equity (Adjusted)

Drake Company reported the following for 2019:

Current assets
   

$87,000

Current liabilities
   

19,000

Revenues
   

450,000

Cost of goods sold
   

220,000

Noncurrent assets
   

186,000

Bonds payable (10%, issued at par)
   

100,000

Preferred stock, $5, $100 par
   

20,000

Common stock, $10 par
   

50,000

Paid-in capital in excess of par
   

48,000

Operating expenses
   

64,000

Retained earnings
   

36,000

Common stockholders received a $2 dividend during the year. The preferred stock is noncumulative and nonparticipating.

Required:

    Ignoring income taxes, show net income for the year of 2019 and stockholders equity for Drake Company at December 31, 2019, which is consistent with each of the following theories of equity:
        Entity theory
        Proprietary theory
        Residual equity theory
    Explain the above differences in net income and stockholders equity by the theory.