Answer 1)
READER DIRECT |
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Balance Sheet |
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At December 31,2017 |
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Assets |
Liabilities |
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Cash and Bank |
$ 55,200 |
Accounts Payable |
$ 12,200 |
Accounts receivable |
$ 36,000 |
Notes Payable |
$ 9,150 |
Property Plant and equipment |
$ 79,500 |
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Total Liabilities |
$ 21,350 |
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Shareholders' Equity |
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Common Stock |
$ 132,300 |
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Retained earnings |
$ 17,050 |
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Total Shareholders' Equity |
$ 149,350 |
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Total Assets |
$ 170,700 |
Total Liabilities and Shareholders' Equity |
$ 170,700 |
Working Notes:
Calculation of balance of Common Stock:
Common Stock = Capital Contributed by Ken Young + Capital Contributed by Kim Sherwood
= $ 66,150 + $ 66,150
=$ 132,300
Calculation of balance of Retained Earnings:
Total Assets = Total Liabilities + Shareholders’ Equity
Total Assets = Total Liabilities + (Common Stock + Retained Earnings)
$ 170,700 = $ 21,350 + $ 132,300 + Retained Earnings
Retained Earnings = $ 170,700 - $ 21,350 - $ 132,300
=$ 17,050
Answer 2)
Calculation of Net Income earned during December 31, 2017
Balance of Retained earnings as on December 31, 2017 = Balance of Retained earnings as on January 1, 2017 + Net Income earned during the year 2017 – Dividend paid during the year 2017
$ 17,050 = $ 0 + Net Income earned during the year 2017 - $ 0
Net Income earned during the year 2017 = $ 17,050
Therefore net income earned during the year 2017 is $ 17,050.
Answer 3)
Calculation of ending balance of retained earnings at December 31, 2018
Balance of Retained earnings as on December 31, 2018 = Balance of Retained earnings as on January 1, 2018 + Net Income earned during the year 2018 – Dividend paid during the year 2018
= $ 17,050 +$ 5,450 - $ 2,700
= $ 19,800
Therefore ending balance of retained earnings at December 31, 2018 is $ 19,800.
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Required information (The following information applies to the questions displayed below.] Part 1 of 4 Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $41,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2017. On that date, the following financial items for the year were determined: cash on hand and in the bank, $36,500; amounts due from customers from sales of books,...
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