Question

I need help filling out the blanks and finding out the net income. Thank you

Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $80,000 cash to start the business and received 4,000 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, $75,600; December 31, current year, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $73,000; December 31, current year, amounts owed to publishers for books purchased, $12,000; one-year note payable to a local bank for $3,000. No dividends were declared or paid to the stockholders during the year. page 30 Required: Complete the following balance sheet as of the end of the current 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.) Assets Liabilities Accounts payable Note payable Interest payable Cash Accounts receivable Store and office equipment 300 Total liabilities Stockholders' Equity Common stock Retained earnings 12,300 Total stockholders’ equity Total liabilities and stockholders' equity Total assets $

Answer 1

Solution:

1) Cole Valley Book Store

Balance Sheet

Assets	$	Liabilities	$
Cash	75600	Accounts Payable	12000
Accounts receivable	39000	Notes payable	3000
Store & office equipment	73000	Interest payable	300
		Total liabilities	15300
		Stockholders' Equity:
		Common Stock	160000
		Retained Earnings	12300
		Total Stockholder's Equity	172300
	187600	Total Liabilities & Stockholders' Equity	187600

Notes:

a) Data for balances at December end is provided in the question. Accordingly balance for cash, accounts receivable, Accounts payable, Store & office equipment, Notes payable, are accounted for.

b) Common stock = Capital contributed by each partner for receiving common stock = $8000 x 2 = $160000.

2) Beginning Retained Earnings + Net Income - Dividend = Ending Retained Earnings

Net Income = Ending Retained Earnings - Beginning Retained Earnings + Dividend

= $12300 + 0 + 0 = $12300

Therefore Net income for the year is $12300.