Question

Save It Check my wor Required information (The following information applies to the questions displayed below.) Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,400 cash to start the business and received 5,200 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $68,450, December 31, current year, amounts due from customers from sales of books, $40,500; unused portion of store and office equipment, $79,500; December 31, current year, amounts owed to publishers for books purchased, $12,900; one-year note payable to a local bank for $3,700. No dividends were declared or paid to the stockholders during the year. 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation (Beginning Retained Earnings + Net Income - Dividends Ending Retained Earnings) to solve for net income.) Amount of net income

Answer 1

Amount of net income

$29,050

Calculations:

Cash, Ending	$68,450
Accounts receivable, Ending	$40,500
Store and office equipment, Ending	$79,500
Total Assets, Ending	$188,450
Accounts payable, Ending	$12,900
Notes payable, Ending	$3,700
Total liabilities, Ending	$16,600
Total Assets, Ending	$188,450
(Less): Total liabilities, Ending	($16,600)
Total Stockholder's Equity, Ending	$171,850
Total Stockholder's Equity, Ending	$171,850
(Less): Common stock [$71,400 x 2 stockholders]	($142,800)
Retained Earnings, Ending	$29,050

Retained earnings, Ending = Retained earnings, Beginning + Net income - Dividends

$29,050 = 0 + Net income - 0

Net income = $29,050