Question

2.10 02,3 Understanding financial statement relationships The information presented here represents selected data from the December 31, 2016, balance sheets and income statements for the year then ended for three firms: Firm B $435,000 Firm A ? $80.000 55,000 ? 68,000 12,000 50,000 Firm C $155,000 75,000 45,000 Total assets, 12/31/16............. Total liabilities, 12/31/16 ................ Paid-in capital, 12/31/16................ Retained earnings, 12/31/16............. Net income for 2016 .... Dividends declared and paid during 2016 ... Retained earnings, 1/1/16............. 59,000 186,000 110,000 25,000 16,000 124,000 Required: Calculate the missing amounts for each firm.

Answer 1

Firm A

Total Asset= Total Liabilities+ Paid in Capital + Retained Earning

=80000+55000+106000= $241000

Retained Earning on 31/12/16= Beg Bal+ Net Income - Dividend

=50000+68000-12000=$106000

Firm B

Total Liabilities= Total Asset- Paid in Capital-Retained Earning

=435000-59000-186000= $190000

Dividend = Retained Earning on 01/01- Retained Earning 31/12+ Net Income

=124000+110000-186000= $48000

Firm C

Retained Eanring 31/12= Total Asset- Ttoal Liabilities- Paid in Capital-

=155000-75000-45000=35000

Retained Earning on 01/1/16= End Bal Retained Earning - Net Income +Dividend

=35000-25000+16000=$26000