The missing amounts.
Answer to Problem 1.4BP
- a) Revenues: $35,000.
- b) Net Income: $5,000.
- c) Issuance of stock: $3,000.
- d) Dividends: $4,000.
- e) Supplies: $5,900
- f) Total assets: $29,000.
- g) Common Stock: $17,000.
- h) Retained earnings: $8,000.
- i) Total liabilities and Stockholders ‘equity: $25,000.
Explanation of Solution
Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.
(b)
Given: Net income in the statement of statement of stockholders’ equity is stated as $5,000. Hence, the amount of net income is $5,000. (1)
(a)
Determine the amount of total expenses.
Determine the amount of revenues:
Hence, the amount of revenues earned during the year is $35,000.
(c)
Determine the amount of common stock issued.
Hence, the amount of common stock issued during the year is $3,000
(d) Determine the amount of dividends.
Hence, the amount of dividends paid during the year is $4,000.
(g), (h) and (i)
Determine the amount of common stock, retained earnings and total stockholders’ equity.
Incorporation C | |||
Statement of | |||
For the year ended December, 31 | |||
Particulars | Common Stock | Retained earnings | Total Stockholders’ Equity |
Balance at the Beginning | $14,000 | $7,000 | $21,000 |
Add: | |||
Additions during the year | $3,000 | $3,000 | |
Net Income during the year | $5,000 | $5,000 | |
$12,000 | $24,000 | ||
Less: | |||
Dividends Paid | ($4,000) | ($4,000) | |
Balance at the End | $17,000 | $8,000 | $25,000 |
Table (1)
Hence, the common stock issued is $17,000, retained earnings kept aside during the year are $8,000 and the total stockholders’ equity is $25,000. (3)
(f) Determine the amount of total assets.
According to
Total liabilities and stockholders’ equity is $29,000, therefore, total assets is $29,000. (4)
Note: Accounts payable is treated as total liabilities.
(e) Determine the amount of supplies.
Hence, the amount of supplies is $5,900.
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Chapter 1 Solutions
Financial Accounting
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