Question

Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation, each contributed $71,200 cash to start the business and received 5,200 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, $69,650; December 31, current year, amounts due from customers from sales of books, $42,500; unused portion of store and office equipment, $78,500; December 31, current year, amounts owed to publishers for books purchased, $13,200; one-year note payable to a local bank for $3,300. 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 Assets Cash Accounts receivable Store and office equipment 220 Liabilities Accounts payable Note payable Interest payable Total liabilities Stockholders' Equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 31,530 Total assets

Answer 1

1)
	Balance Sheet
	Assets				Liabilities
	Cash			$    69,650.00	Accounts Payable				$    13,200.00
	Accounts Receivable			$    42,500.00	Note Payable				$      3,300.00
	Store and office equipment			$    78,500.00	Interest Payable				$         220.00
					Total Liabilities				$    16,720.00
						Stockholder's Equity
					Common Stock				$ 1,42,400.00
					Retained Earnings				$    31,530.00
					Total stockholder's equity				$ 1,73,930.00
	Total assets			$1,90,650.00	Total liabilities and stockholder's equity				$1,90,650.00

2)	Since it's the first year of operation there's no beginning retained earnings.
	Therefore, ending retained earnings = net income for the year as no dividends
	were declared or paid during the year.
	Net Income		=	$ 31,530.00

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