Question

Saved Save & Exit od 20 Help E1-5 (Algo) Completing a Balance Sheet and Inferring Net Income L01-1 [The following information applies to the questions displayed below.) Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $70,700 cash to start the business and received 4,200 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank. $69,150: December 31, current year, amounts due from customers from sales of books, $42,500; unused portion of store and office equipment, $79,000; December 31, current year, amounts owed to publishers for books purchased, $13,300; one-year note payable to a local bank for $3,900. No dividends were declared or paid to the stockholders during the year. E1-5 Part 1 Required: 1. Complete the following balance sheet as of the end of current year. Some information has been given below. COLE VALLEY BOOK STORE Balance Sheet Liabilities Assets Cash Accounts receivable Store and office equipment 70,700 Accounts payable Note payable Interest payable Total liabilities 180 180 $ Stockholders' Equity Common stock

Answer 1

1 Assets Cash Accounts receivable Store and office equipment COLE VALLEY BOOK STORE Balance sheet Amount ($) Liabilities 69150 Accounts payable 42500 Notes payable 79000 Total Liabilities Stockholder's equity Common stock Retained earnings 190650 Total liabilities and Stoc holder's equity Amount ($) 13300 3900 17200 141400 32050 190650 Total Assets Capital invested by partners = $70,700 per partner Hence, owner's equity, beginning = 70,700 x 2 = 141400 Ending assets = Cash + Accounts receivable + Store and office equipments = $ 69150+42500+79000 $ 190650 Ending liabilities = Accounts payable + note payable = $ 13300+3900 $ 17200 Owners equity, ending = Ending assets - Ending liabilities = $ 190650-17200 $ 173450

Owner's equity ending = Owners equity, beginning + Retained earnings, ending 173,450 = 141,400+ Retained earnings, ending Retained earnings, ending = $32,050 2 Retained earnings, ending = Retained earnings, beginning + Net income - Dividends 32,050 = 0 + Net income - 0 Net income =$32,050

Hope You Understood. If you have any doubt please leave a comment. Thank You