Question

In addition, the balance of common stock at the beginning of the year was $650,000, and the balance of retained earnings was $50,000. During the year, the company issued additional shares of common stock for $34,000 and paid dividends of $28,000. In addition, the company reported balances for the following assets and liabilities on December 31. Assets Liabilities Cash $ 54,400 Accounts payable $ 15,600 Supplies 12,700 Utilities payable 6,000 Prepaid rent 33,000 Salaries payable 5,300 Land 290,000 Notes payable 33,000 Required: 1. Prepare a statement of stockholders’ equity. 2. Prepare a balance sheet.

Answer 1

Assets Liabilies

Cash 54,400 Account Payable 15,600

Supplies 12,700 Salaries Payable 5,300

Prepaid Rent 33,000 Utilities payable 6,000

Total Current Assets 100,100 Note Payable 33,000

Land 290,000 Total liabilities 59,900

Common Stock 684,000

RE -353,800(A)

Total Equity 330,200

Total Asets 390,100 Liab + SE 390,100

Common Stock Retained Earings Total

Balance Jan 1 650,000 50,000 700,000

Net Loss -375,800(B) -375,800

Dividends -28,000 -28,000

Stock issued 34,000 34,000

Balance, Dec 31 684,000 -353,800 330,200

Step-by-step explanation:

(A)

We calcualte RE ending balance using the accounting equation:

Assets = Liabilities + Equity

390,100 = 59,900 + Common stock + RE

390,100 = 59,900 + (650,000 + 34,000) + RE

RE = 390,000 -59,900 - 684,000

RE = -353,800

Then we construct the Stockholders equity statement

(B)

net loss will be:

begining RE + income + dividend = ending RE

50,000 + income - 28,000 = -353,800

income= -353,800 +28,000 - 50,000 = -375,800 net loss as it is negative.