Question

Statement of Stockholders' Equity and Balance Sheet The following is balance sheet information for Lynch Janitorial Service, Inc., at the end of 2016 and 2015: December 31, December 31, 2016 2015 Accounts Payable $6,000 $9,000 Cash 23,000 20,000 Accounts Receivable 42,000 33,000 Land 40,000 40,000 Building, net 250,000 260,000 Equipment, net 43,000 45,000 Mortgage Payable 90,000 100,000 Supplies 20,000 18,000 Common Stock 220,000 220,000 Dividends 10,000 Retained Earnings Required a. Prepare a balance sheet as of December 31 of each year. LYNCH JANITORIAL SERVICE, INC. Balance Sheet December 31, December 31, 2016 2015 ASSETS 23000 $ 20000 Cash 42000 33000 Accounts Receivable 20000 18000 Supplies 40000 40000 260000 land ronn

Answer 1

As we know the accounting equation is Assets = Liabilities & Owners' Equity Owners Equity includes common stock and Retained Earnings ao we can calculate Retained Earnings by deducting Leabilities and common stock from Assets. - statement showing Calculation of Retained Earnings Balance December 31 December 31, 2016 I 2015 Total Assets $ 418000 $ 416,000 Total liabilities 96,000 109,000 Common stock 220,000 220.000 Retained Earnings $102,000 $87,000 Less:

calculation of Net Encome of 2016 Retained Earnings balance on Dec 31, 2016 $102,000 Deridend paid sobre 10.000 Add LeBS! Retained 112,000 Fornings balance on Dec 3, 2015 81000 Net Encome of 2016 $25.000 Note: When dividends are paid the amount is adjusted against Net Income as a result the Retained Earnings balance also gets reduced. For this the amount of dividends paid added with Retained Earnings for getting Net Income.

Requirement & a LYNCH JANITORIAL SERVICE INC. Balance Sheet Decomber 31 December 31 2016 2015 ASSETS Cash $23,000 $20,000 Accounts Receivable 42.000 33.000 Supplies 20.000 18.000 Land Building, net 40.000 40.000 250.000 260,000 Ecruipment, net 43,000 45.000 Total Assets $418,000 $416,000 LIABILITIES Accounts Payable + GOO | SOCO mortgage Payable 90.000 100000 Total Liabilities 96,000 logooo STOCKHOLDERS' EQUITY common stock 220000 220 000 Retained Earnings 102,000 Total stockholders' Egcity 322,000 307000 Total Liabilities and stockholders' Equity $418,000 $416,000

Requirement ob LYNCH JANITORIAL SERVICE, INC Statement of stockholders' Eguity for Year Ended December 31, 2016 Common stock Retained Total Earnings Balance, December 31, 2015 $220,000 $87,000 $307,000 Add: Net Income for 2016 25,000 25000 Less: Dividends for 2016 (10,000) (10,000) Balance, December 31, 2016 $220,000 $102,000 $322,000