Question

The year-end financial statements of Grunewald Company contained the following elements and corresponding amounts:

Assets = $22,450

Common Stock = $5,000

Revenue = $11,270

Dividends = $810

Beginning Retained Earnings = $3,750

Ending Retained Earnings = $6,150

1. Based on this information, the amount of expenses on Grunewald's income statement was...?

2. The amount of liabilities reported on the end-of-period balance sheet was...?

Answer 1

Answer:

1. Retained earnings Beginning Balance + Net Income - Dividend = Ending Retained earning

$3750 + Net Income - $810 = $6,150

Net Income + $2940 = $6,150

Net Income = $6,150 - $2940

Net Income = $3210

Expenses = Revenue - Net Income

= $11,270 - $3210

Expenses = $8060

2. Asset = Liability + Equity

Equity consists of Common stock and Retained earnings so

Asset = Liability + Common stock + Retained earnings

$22,450 = Liability + $5000 + $3750(Beginning retained earnings Balance)

$22,450 = Liability + $8750

Liability = $22,450 - $8750

Liability = $13,700

or

Asset = Liability + Common stock + Retained earnings

$22,450 = Liability + $5000 + $6,150 (Ending Retained Earnings balance)

$22,450 = Liability + $11,150

Liability = $22,450 - $11,150

Liability = $11,300

In order to find ending liability i had calculated by taking Retained earnings both Beginning and ending so consider as your requirement.