Question

Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $59.000 cash to stort the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2014. On that date, the following financial items for the year were determined: cash on hand and in the bank, $54,500; amounts due from customers from sales of books, $28,900; equipment, $58,000: amounts owed to publishers for books purchased, $9.400, one-year note payable to o local bank for $5.850 No dividends were declared or paid to the stockholders during the year value: 1.50 points Required 1.Complete the following balance sheet at December 31. 2014. READER DIRECT Balance Sheet At December 31, 2014 Assets Liabilitie s Cash Accounts Receivable Equipment Accounts Payable Note Payable Total Liabilities Stockholders' Equity Common Stock Retained Earnings 8.150 8.150 So Total Liabilities and Stookholders' EquityS.150 Total Stockholders Equity Total Assets

Answer 1

Answer =1)
READER DIRECT
BALANCE SHEET
AS OF DECEMBER 31,2014
ASSETS	AMOUNT	LIABILITIES & SHAREHOLDER'S EQUITY	AMOUNT
		LIABILITIES:
Cash	$               54,500	Account Payable	$                       9,400
Account Receivable	$               28,900	Note Payable	$                       5,850
Equipment	$               58,000
		Total Liabilities (A)	$                     15,250
		SHAREHOLDER'S EQUITY
		Common Shareholder's Equity	$                 1,18,000
		($59,000 X 2 )
			$                       8,150
		Total of Stockholder's Equity (B)	$                 1,26,150
TOTAL OF ASSETS	$           1,41,400	TOTAL OF LIABILITES & SAHREHOLDER'S EQUITY (A + B)	$                 1,41,400
Answer = 2)
Net Income = Closing Balance of Retained Earning + Dividend Paid -Opening Balance of Retained Earning
Net Income = $ 8,150 + $ 0 - $ 0
Net Income = $ 8,150
Answer = 3)
Closing Retained Earning = Opening Balance of Retained Earning + Net Income - dividend Paid
Closing Retained Earning = $ 8,150 + $ 8,000 - $ 4,000
Closing Retained Earning = $ 12,150