Question

Calculate missing amounts E1-9 Here are incomplete financial statements for Donavan, Inc LO 3), AN DONAVAN, INC. Balance Sheet ssets Liabilities and Stockholders' Equity Cash Inventory Buildings 45,000 Stockholders' equity Total assets S62,000 $ 7,000 Liabilities 10,000 Accounts payable S 5,000 Common stock Retained earnings Total liabilities and stockholders' equity $62,000 Income Statement $85,000 Revenues Cost of goods sold Salaries and wages expense Net income 10,000 S (d) Retained Earnings Statement Beginning retained earnings S12,000 Add: Net income Less: Dividends Ending retained earnings 5,000 S27,000 Instructions Calculate the missing amounts.

Answer 1

1) Calculation of Net income (e) ( Used Retained Earning Statement)

Ending Retained Earning = Beginning retained earning + Net income - Dividend

$27,000 = $12,000+ Net Income -$5,000

So Net Income Is = $27000-$7000 i.e $20000

2) Calculation of COGS (C) ( Used Income Statement) ((Net Income (d) is calculated in step 1 above))

Net Income = Revenue - COGS - Salaries & wages

$20,000 = $85,000 - COGS -$10,000

COGS = $55,000

3) Retained Earning (b) is $ 27,000 as given in the question (Retained earning statement)

4) Common Stock ( By using Balance sheet total)

Total liabilities and stockholder equity = account payable + common stock + retained earning

$62000 = $5000+ Common Stock+$27000

Common Stock = $30000

Summary

A) $30000

B) $27000

C)$55000

D)$20000

E)$20000